Duration risk weighed on investors’ minds Friday ahead of next week’s Federal Reserve meeting as traders sold bonds with longer maturities in exchange for short-term bonds.

Some municipal bond investors are expecting the Federal Open Market Committee to announce plans to start tapering the $85 billion-a-month bond purchasing program. Prior tothe FOMC meeting Wednesday, buyers are selling longer dated securities and buying bonds that mature sooner.

Yields on the S&P Short-Term AMT-Free Municipal Bond Index remained flat and posted a modest negative 0.11% return for June. One-year bonds as tracked by the S&P AMT-Free Muni Series 2014 Index returned a positive 0.02% month-to-date with yields falling one basis point.

Bonds with longer durations suffered. Five year bonds as tracked by the S&P AMT-Free Muni Series 2018 Index returned a negative 0.7% month-to-date as yields jumped 17 basis points.

Yields on the 10-year bonds tracked by the S&P index jumped 21 basis points a posted a negative 1.81% return for June. Taxable equivalent yield of the 10-year index is 4.38%, according to J.R. Rieger, vice president of fixed income at S&P Down Jones Indices.

Outside the 20-year range, yields have increased 45 basis points in June so far and the index returned a negative 2.4%.

Muni losses have outweighed those of Treasuries. “Treasury bond and notes started the year in negative territory, finally getting their head above water on a consistent basis around the beginning of April,” Rieger said. “The positive returns did not last long as they slipped into negative territory on May 13 and have remained at a loss since the 17th.” Treasuries have returned negative 0.69% year-to-date according to the S&P BGCantor US Treasury Bond Index.

After a selloff that lasted through May and into June, munis found their footing Friday afternoon and started posting gains.

“Maybe we have found a bit of stability, but it’s a little early to say for sure,” a Texas trader said. “But today it feels like we stopped just free falling.”

The last few weeks have been brutal, the trader said. “There was a lot of blood taken. Some people that just bought bonds literally a week or two ago just fell on the sword and there were some really ugly trades. But, retail appears to be coming back in a much bigger way than they have in quite a while.”

By afternoon, activity started to drop. “It’s a typical quiet muni market on a summer Friday,” a New York trader said. “Some large funds are doing tax loss swaps.”

In the secondary market Friday, trades compiled by data provider showed strengthening.

Yields on Virginia’s Tobacco Settlement Financing Corp. 5s of 2047 slipped six basis points to 6.93%. Yields on Indiana University 5s of 2026 fell four basis points to 2.95%.

Yields on San Francisco 5s of 2025 and Houston Independent School District 5s of 2027 fell three basis points each to 3.00% and 3.02%, respectively.

Yields on Austin, Texas, Convention Enterprises Inc. 5s of 2034 fell three basis points to 5.07% and New York’s Metropolitan Transportation Authority 5s of 2043 dropped two basis points to 4.40%.

Yields on the Municipal Market Data scale ended as much as four basis points lower Friday. The 10-year yield fell four basis points to 2.23% and the 30-year yield slid two basis points to 3.50%. The two-year was steady at 0.31% for the third session.

Muni yields on the Municipal Market Advisors 5% scale closed as much as three basis points lower. The 10-year yield fell three basis points to 2.33% and the 30-year yield slipped two basis points to 3.62%. The two-year yield fell one basis point to 0.38%.

Treasuries were stronger Friday for a second session. The benchmark 10-year yield fell five basis points to 2.13%. The two-year and 30-year yields slid three basis points each to 0.29% and 3.30%, respectively.

Looking to next week, supply is expected to increase slightly to $6.40 billion from this week’s revised $6.18 billion. The negotiated calendar can expected $5.37 billion, up from this week’s revised $4.38 billion. On the competitive side, $1.03 billion should be auctioned, down from this week’s revised $1.80 billion.

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