Municipal bonds trailed Treasuries’ rally Thursday after the end of the government standoff as cash-heavy investors anticipated calmer waters and a surge in volume.

“We thought we’d see some action in the market but there’s a lot of supply on the horizon, so I think investors are content to let things sit,” a trader in San Francisco said, as tax-exempt yields slipped a few basis points, but lagged behind those of Treasuries. “We’re not really rallying. The Treasury market is rallying; we’re really underperforming what’s going on there. We’ve just stabilized. It seems we’re going to see these new levels. We’re going to see spreads widen.”

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