The municipal bond market underperformed Treasuries as building supply in the secondary kept tax-exempts from rallying along with their taxable counterparts.

"Activity feels very slow," a Virginia trader said. "We put odds and ends out for bid and they are consistent and firm but as far as large trades go, we haven't been busy."

He added that while Treasuries are having a "solid day" munis are underperforming due to supply this week and healthy supply calendar next week.

Other traders said secondary supply was building after a busy primary. "It's pretty flat," a New York trader said Friday morning. "There are more sellers than buyers. So there are still a lot of bonds in the secondary and a building supply."

In the secondary market, trades compiled by data provider Markit showed mostly strengthening. Yields on Ohio's Buckeye Tobacco Settlement Financing Authority 5.875s of 2030 dropped four basis points to 6.90% and University of California 5s of 2025 dropped three basis points to 2.26%.

Yields on Washington 5s of 2025 and Houston Independent School District 5s of 2022 slid two basis points each to 2.29% and 1.65%, respectively. Yields on Texas A&M University 5s of 2022 also fell two basis points to 1.67%.

Still, other trades were weaker. Yields on Stamford, Conn., 4s of 2021 jumped three basis points to 1.54% and New York City Municipal Water Finance Authority 5s of 2031 increased one basis points to 2.79%.

In retail trades of under 100 bonds — or $100,000 par value — secondary activity was higher than the previous week, but still felt short when compared to the last five weeks, according to data from BondDesk Group.

There were 59,491 buy trades for the week ending April 10 compared to the previous week's 48,473 buy trades. The number of buy trades was the second lowest in the past five weeks.

Sell trades jumped to 37,655 versus the previous week's 27,324 trades. The number of sell trades was the highest in the previous five weeks.

The ratio of buy trades to sell trades fell to 1.6, down from last week's 1.8 and the lowest of the past five weeks.

Dollar volume traded also rose for the week ending April 10. There were $1.640 billion buy trades for the week compared to the $1.329 billion buy trades for the week before. Sell trades jumped to their highest in five weeks to $1.088 billion compared to the previous week's $789 million sell trades.

The ratio of buy trades to sell trades in dollar amount fell to 1.5 compared to the previous week's 1.7.

Municipal bond scales ended stronger Friday after weaker sessions earlier in the week.

Yields on the Municipal Market Data triple-A GO scale were as much as three basis points lower. The 10-year yield fell two basis points to 1.72% and the 30-year yield dropped three basis points to 2.94%. The two-year closed steady at 0.29% for the sixth session.

Yields on the Municipal Market Advisors 5% coupon triple-A benchmark scale ended as much as two basis points lower. The 10-year yield dropped two basis points to 1.79% and the 30-year yield slid one basis point to 3.05%. The two-year was steady at 0.32% for the sixth session.

Treasuries posted strong gains Friday. The benchmark 10-year and 30-year yields plunged eight basis points each to 1.72% and 2.92%, respectively. The two-year was steady at 0.23%.

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