The tax-exempt market quieted down very quickly late Wednesday morning as traders left muni desks for the Thanksgiving holiday and those remaining started to focus on next week's issuance.

"The market is pretty dead now," a Chicago trader said. "But the trades that were going on were almost firmer. There was not a huge bump but a couple trades are getting done semi firmer. It's a little better than expected."

He added next week's increased issuance should help offset some demand. "Around this time of the year you see deals pop out of the woodwork. A couple guys I talked to said the market could grind higher and tighten up. I have a hard time believing that with the new issue calendar next week and ratios around the lowest of the year. But, there is a lot of demand."

After setting record lows over the previous two weeks, the market took a breather Monday and Tuesday. The 10-year Municipal Market Data yield rose one basis point to 1.51%, hovering just above the record low of 1.50% set Friday.

The 30-year MMD yield remained unchanged for the third session at its record low of 2.54% set Friday. The two-year finished steady at 0.30% for the 38th consecutive trading session.

Treasuries continued to weaken for the third session Wednesday. The benchmark 10-year yield jumped three basis points to 1.69% while the 30-year yield increased two basis points to 2.83%. The two-year yield rose one basis point to 0.28%.

In next week's primary market, municipals can expect $7.92 billion to be issued, up from this week's revised $2.29 billion. On the negotiated calendar, $5.82 billion is expected to be priced, up from this week's revised $2.01 billion. In competitive deals, $2.10 billion should be auctioned, up from this week's revised $276.4 million.

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