The tax-exempt market showed little signs of weakening amid a flood of new issuance Wednesday.

Traders said the secondary market took a backseat to the primary as California and Florida both came to market with $2 billion dollar deals.

"We will see a new scale for institutional pricing Wednesday but I don't hear anything bad out there," a Los Angeles trader said about the California deal. "The market feels good and the tone has just totally turned around after Friday's employment number."

Bank of America Merrill Lynch and Morgan Stanley priced for retail $2.1 billion of California various purpose general obligation bonds, rated A1 by Moody's Investors Service, A by Standard & Poor's, and A-minus by Fitch Ratings. Institutional pricing is expected Thursday.

Yields on the first series of $1.25 billion ranged from 0.65% with a 5% coupon in 2016 to 4% priced at par in 2043. Bonds maturing in 2013 were offered via sealed bid. Portions of credits maturing in 2037 and 2043 were not offered for retail. The bonds are callable at par in 2023.

Spreads on bonds with 5% coupons maturing between 2016 and 2022 ranged from 23 basis points to 62 basis points above Tuesday's Municipal Market Data scale.

Yields on the second series of $802 million of refunding bonds ranged from 0.65% with 3% and 4% coupons in a split 2016 maturity to 3.61% with a 3.5% coupon in 2030. Credits maturing between 2013 and 2015 were offered via sealed bid. Portions of bonds maturing between 2024 and 2033 were not offered for retail. The bonds are callable at par in 2023 except for those maturing in 2023. Bonds maturing in 2024 and 2029 are callable at par in 2018.

Bonds with a 5% coupon maturing in 2024 and 2029 were priced right on the MMD scale but have a five-year call.

Barclays priced $2 billion of Florida Hurricane Catastrophe Fund Finance Corp. taxable revenue bonds, rated Aa3 by Moody's, AA-minus by Standard & Poor's, and AA by Fitch.

The bonds were priced at par with a 1.298% coupon in 2016, 2.107% coupon in 2018, and 2.995% coupon in 2020. The bonds were priced from 95 basis points, 137.5 basis points, and 180 basis points above the comparable Treasury yields.

Outside the two biggest deals, traders said the market felt a bit weaker. "New issues seem to be going fairly well, but seem priced to move," a trader in Ohio said. "The secondary seems quiet. You have to have a cheap piece to offer if you want your phone to ring. Otherwise, the focus is on the primary."

This trader added the belly of the curve seemed three to five basis points cheaper.

In other big primary deals, Morgan Stanley priced $234.2 million of Tennessee's Metropolitan Government of Nashville and Davidson County water and sewer revenue bonds, rated Aa3 by Moody's and AA-minus by Standard & Poor's.

Yields ranged from 1.90% with 3% and 5% coupons in a split 2022 maturity to 3.44% with a 5% coupon in 2043. The bonds are callable at par in 2023.

In the competitive market, Citi won the bid for $200 million of Michigan taxable GO school loan bonds, rated Aa2 by Moody's, AA-minus by Standard & Poor's, and AA by Fitch.

Yields ranged from 2.68% with a 2.65% coupon in 2024 to 3.80% priced at par in 2033. The bonds are callable at par in 2023.

Municipal bond scales ended as much as three basis points weaker Wednesday and a slightly lower session Tuesday.

Yields on the Municipal Market Data triple-A GO scale as much as three basis points higher. The 10-year yield increased two basis points to 1.74% and the 30-year yield jumped three basis points to 2.97%. The two-year closed steady at 0.29% for the fourth session.

Yields on the Municipal Market Advisors 5% coupon triple-A benchmark scale also ended as much as three basis points higher. The 10-year and 30-year yields rose one basis point each to 1.80% and 3.06%, respectively. The two-year was steady at 0.32% for the fourth session.

Treasuries weakened as Wednesday progressed. The benchmark 10-year yield jumped ive basis points to 1.81% and the 30-year yield spiked up seven basis points to 3.01%. The two-year was steady at 0.23%.

In similar bonds news, the Federal Open Market Committee released minutes of its March meeting earlier than expected Wednesday morning.

In the minutes, FOMC members acknowledged QE3 is having a "meaningful effect" on the markets, though members disagree on how long assets purchase should continue. The minutes said "a few" members already believe costs outweigh benefits and "would like to bring the program to a close relatively soon," while "a few others" said the risks may increase "fairly quickly with the size of the Federal Reserve's balance sheet" and expected to curb the asset buys "before long."

Still, "many participants, including some of those who were focused on the increasing risks, expressed the view that continued solid improvement in the outlook for the labor market could prompt the Committee to slow the pace of purchases beginning at some point over the next several meetings, while a few participants suggested that economic conditions would likely justify continuing the program at its current pace at least until late in the year."

Economists were quick to react. "Assuming economic activity continues to improve, it looks like the FOMC is leaning towards tapering later this year, which is in-line with our call," wrote Jennifer Lee, senior economist at BMO Capital Markets. "The topic of paring, tapering, slowing, of its asset purchases was becoming more mainstream. Yes, the benefits are still outweighing the costs but clearly, the risks will have to be monitored. So I'm stating the obvious here."

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