The tax-exempt market focused on the largest deal of the week - $950 million of Pennsylvania general obligation bonds - expected to be auctioned later Wednesday morning.
The bonds are rated Aa2 by Moody's Investors Service, AA by Standard & Poor's, and AA-plus by Fitch Ratings.
"Pennsylvania is going to get a big number," a New York trader said. "There are lots of buyers out there."
Outside the Pennsylvania competitive deal, several of the week's largest deals were also expected to price in the negotiated market.
Bank of America Merrill Lynch is expected to price $203.9 million of Missouri's Health and Educational Facilities Authority bonds, rated A2 by Moody's and A by Standard & Poor's.
Citi is expected to price $202 million of Oregon lottery revenue bonds, rated Aa2 by Moody's and AAA by Standard & Poor's. The series will consist of $122 million of tax-exempts and $80 million of taxable bonds.
Barclays is expected to price $182.5 million of WPPI Energy Power Supply System revenue bonds, rated A1 by Moody's, A by Standard & Poor's, and A-plus by Fitch Ratings.
On Tuesday, municipal bond scales ended steady to one basis point weaker after finishing two basis points stronger Monday.
Yields on the Municipal Market Data triple-A GO scale ended steady across the curve. The 10-year yield closed flat at 1.89% for the second session while the 30-year yield held steady at 3.09% for the fourth session. The two-year finished flat at 0.31% for the 30th consecutive session.
Yields on the Municipal Market Advisors 5% coupon triple-A benchmark scale ended steady to one basis point weaker. The 10-year and 30-year yields increased one basis point each to 1.95% and 3.19%, respectively. The two-year held at 0.33% for the 25th session.
Treasuries were strong Wednesday morning, reversing Tuesday's losses. The benchmark 10-year yield and the 30-year yield dropped four basis points each to 1.83% and 3.07%, respectively. The two-year yield fell one basis point to 0.24%.
