Tax-exempt traders described the market as a being in a “muni malaise” Thursday afternoon with continued selling pressure and very few buyers interested.

With Treasury yields rising eight basis points on the 10-year and 30-year, munis continued to weaken, though at a lag.

“If I liked prices three weeks ago, I love it now,” a Boston trader said. “But the market keeps selling off. It feels like you’re never going to hit bottom and it’s taking forever to get there, but you just have to persevere.”

This trader cautioned that while the market continues to head lower a few basis points every session, he is not worried about a massive credit situation. “We are not in a situation where there will be massive credit defaults. The market may sell off, but it’s more of a complete abandonment of the market by the buy side. There is no money there.”

Indeed, institutional trading of block sizes over $1 million was down this week versus last week, according to Interactive Data.

On Tuesday, there were 3,668 block size trades of $1.208 billion in par value, down from the previous Tuesday’s 5,548 trades of $1.912 billion. On Wednesday, there were 5,101 block size trades with a par value of $1.770 billion, down from the previous Wednesday’s 5,441 trades of $2.087 billion.

“This is the single worst muni market performance,” the trader said. “The supply and demand is unreal right now. It’s very wobbly right now and no one is stepping up – not even the cross over buyers.”

Wednesday, yields on the triple-A Municipal Market Data scale ended flat. The 10-year finished steady at 3.02% and the 30-year was unchanged at 4.49%. The two-year finished flat at 0.43% for the 35th straight session.

Yields on the Municipal Market Advisors scale ended mostly steady. The 10-year and 30-year yields ended unchanged at 3.14% and 4.59%, respectively. The two-year closed unchanged at 0.55% for the 14th session.

Treasuries continued to weaken Thursday afternoon. The benchmark 10-year and 30-year yields rose eight basis points each to 2.98% and 3.88%, respectively. The two-year yield increased six basis points to 0.52%.

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