NEW YORK – The tax-exempt market has been asleep so far this week as traders say action in the primary and secondary markets has been muted.

“Overall the level is pretty lethargic today,” a Chicago trader said. “There are some things that seem to be trading but the strike zone has become a lot smaller and more defined. I don’t think there is a tremendous amount of distressed selling, but it’s certainly not constructive anymore.”

He added traders are throwing around the word “tired” to describe the market this week. “And it seems to be driven as much by external shocks as by actual supply and demand,” he said. “So it makes it hard to really get a read on what’s happening.”

Still, the Municipal Market Data scale showed munis weakening. Yields inside three years were steady while the four- and five-year yields rose up to two basis points. Outside six years, yields jumped two to six basis points.

On Tuesday, the 10-year yield rose one basis point to 1.74% – closing seven basis points above its record low of 1.67% set Jan. 18. The 30-year yield increased two basis points to 3.07%, finish up from the 3.05% record low recorded by MMD on Monday. The two-year yield remained steady at 0.31% for the 20th consecutive trading session.

Treasuries were only slightly weaker. The benchmark 10-year yield rose two basis points to 1.79% while the 30-year yield rose one basis point to 2.93%. The two-year was steady at 0.29%.

In the primary market, Mesirow Financial priced $593.2 million of Chicago general obligation bonds, rated Aa3 by Moody’s Investors Service, A-plus by Standard & Poor’s, and AA-minus by Fitch Ratings. The pricing included $308.2 million of taxable bonds and $285 million of tax-exempt bonds.

The first series, $177.8 million of tax-exempt bonds, yielded 3.40% with a 5% coupon in 2030, 3.52% with a 5% coupon in 2032, 3.59% with a 5% coupon in 2033, and 3.66% with a 5% coupon in 2034. The bonds are callable at par in 2022.

Yields on the second series $107.2 million of tax-exempt bonds, ranged from 2.17% with 5% and 4% coupons in a split 2020 maturity to 3.77% with a 4% coupon in 2032. The bonds are callable at par in 2022.

The $308.2 million of taxable bonds yielded 5.432% priced at par in 2042.

Barclays Capital priced $414.6 million of North Texas Tollway Authority system revenue refunding bonds, rated A2 by Moody’s and A-minus by Standard & Poor’s.

Yields ranged from 2.83% with a 5% coupon in 2021 to 4.49% with a 5% coupon in 2052. The bonds are callable at par in 2022.

Morgan Stanley repriced $93.1 million of Illinois Finance Authority revenue bonds for Loyola University of Chicago, rated A2 by Moody’s and A by Standard & Poor’s.

Yields ranged from 0.95% with a 3% coupon in 2014 to 4.02% with a 5% coupon in 2042. Credits maturing in 2013 were not formally re-offered. The bonds are callable at par in 2022. Yields were lowered as much as 10 basis points on the short end from preliminary pricing.

In the secondary market, trades reported by the Municipal Securities Rulemaking Board continued to show firming over the last few trading sessions.

A dealer bought from a customer Springfield, Ill., 5s of 2023 at 3.48%, 11 basis points lower than where they traded Monday.

Bonds from an interdealer trade of Knox County, Tenn., 5.5s of 2014 yielded 0.37%, eight basis points lower than where they traded Monday.

A dealer sold to a customer New York City Transitional Finance Authority 5s of 2021 at 1.85%, four basis points lower than where they traded last week.

Bonds from an interdealer trade of Collin County, Texas, 4s of 2019 yielded 1.36%, three basis points lower than where they traded Tuesday.

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