The tax-exempt market opened the holiday-shortened trading week on a very quiet note as buyers failed to find momentum after a three-day weekend.

Traders also noted that vacation week for schools left desks empty.

The Securities Industry and Financial Markets Association recommended a full close Monday for the President's Day holiday.

"It's quiet," a Los Angeles trader said. "It could be a little hangover from the weekend. There is very little on the bid-wanted side and no new issues today. Treasuries aren't doing anything so there is no direction. We are all waiting for something to happen."

Still, the market is holding steady, the trader said. "The market is holding in there. It's done OK. It just doesn't seem like it has any kind of drive to it. It's just a sleepy Tuesday and quieter than most Mondays."

Other traders agreed the market struggled to find momentum after the three-day weekend and school vacations were playing a role.

"It's very quiet today," a New York trader said, adding a lot of traders are home as many schools are on winter break this week.

Still, these traders added that the market is looking forward to a pick up in primary activity Wednesday when the majority of the new issues calendar should price.

This week, $6.67 billion is expected to price, up from last week's revised $5.92 billion. On the negotiated calendar, $4.42 billion should be issued, up from last week's revised $3.45 billion. In the competitive market, $2.25 billion is expected to be auctioned, down from last week's revised $2.47 billion.

In the primary market Tuesday, JPMorgan priced for retail and institutions $307 million of Utah's Intermountain Power Agency subordinated power supply revenue refunding bonds, rated A1 by Moody's Investors Service, A-plus by Standard & Poor's, and AA-minus by Fitch Ratings.

In retail pricing, yields ranged from 0.33% with a 2% coupon in 2014 to 1.88% with a 5% coupon in 2023. The bonds are callable at par in 2018. Institutional pricing was not available by press time.

Bank of America Merrill Lynch priced for retail $115 million of triple-A rated Delaware general obligation refunding bonds. Institutional pricing is expected Wednesday.

Yields ranged from 0.66% with 3% and 4% coupons in a split 2017 maturity to 2.42% with a 3% coupon in 2026, The bonds are callable at par in 2023.

In the competitive market, Harford County, Md., auctioned $113.7 million of GOs in two pricings: $76.9 million and $40 million. The bonds are rated Aaa by Moody's, AA-plus by Standard & Poor's and AAA by Fitch.

Citi won the bid for $74.7 million. Yields ranged from 0.20% with a 2% coupon in 2014 to 2.98% with a 3% coupon in 2028. The bonds are callable at par in 2023.

JPMorgan won the bid for $40 million. Yields ranged from 0.18% with a 3% coupon in 2014 to 3.03% with a 3.5% coupon in 2033. The bonds are callable at par in 2023.

In the secondary market, trades compiled by data provider Markit showed a mix of strengthening and weakening.

Yields on Tennessee's Metropolitan Government of Nashville and Davidson County Health and Educational Facilities Board 2s of 2018 and Houston Utility System 5s of 2033 jumped two basis points each to 1.06% and 2.74%, respectively.

Yields on Dormitory Authority of the State of New York 5s of 2042 and San Antonio, Texas, Electric and Gas 5s of 2032 increased one basis point each to 3.20% and 1.45%, respectively.

Other trades were stronger.

Yields on California's Inland Empire Tobacco Securitization Authority 5s of 2021 plunged five basis points to 4.95% while South Carolina 5s of 2021 fell three basis points to 1.51%. Yields on San Diego Public Facilities Financing Authority 5.5s of 2023 dropped two basis points to 1.45%.

On Tuesday, municipal bond market scales finished steady to stronger.

Yields on the Municipal Market Data triple-A GO scale ended flat to two basis points lower. The 10-year yield and the 30-year yield finished steady at 1.85% and 2.92%, respectively. The two-year yield fell one basis point to 0.31% after trading steady at 0.32% for five sessions.

The Municipal Market Advisors 5% coupon triple-A benchmark scale ended steady for the second session. The 10-year yield closed flat at 1.87% for the fourth session while the 30-year yield also closed flat for the fourth session at 2.99%. The two-year closed unchanged at 0.35% for the 16th session.

Treasuries traded steady Tuesday morning and started to drift by the afternoon. The benchmark 10-year yield jumped two basis points to 2.03% while the 30-year yield increased three basis points to 3.21%. The two-year was steady at 0.28%.

Over the course of February, muni to Treasury ratios have risen as munis underperformed their taxable counterparts and became relatively cheaper.

The five-year muni yield to Treasury yield ratio jumped to 94.3% on Feb. 19 from 89.8% at the beginning of February. Similarly, the 10-year ratio rose to 91.6% on Tuesday from 90.5% at the beginning of the month. The 30-year ratio also rose to 91.3% from 89.1% at the start of February.

But since the beginning of the year, ratios have fallen across the curve as munis outperformed Treasuries and became relatively more expensive.

The five-year ratio plummeted to 94.3% on Feb. 19 from 110.5% at the beginning of the year. The 10-year muni yield to Treasury yield ratio fell to 91.6% on Tuesday from 96.7% at the beginning of 2013. Similarly, the 30-year ratio dropped slightly to 91.3% from 93.8% at the beginning of the year.

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