The tax-exempt market continued to see limited activity as traders noted throughout the day that, with a lack of momentum, markets weren't moving.

Despite several deals holding retail order periods, traders said the market seemed quiet.

"It's very slow today," a Boston trader said. "The phones are barely ringing."

In the primary market, Citi held a second retail order period for $850 million of New York City general obligation bonds, rated Aa2 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings. A first retail order period took place Friday and institutional pricing is expected Tuesday. Pricing details were not yet available.

RBC Capital Markets priced for retail $625 million of Connecticut special tax obligation bonds for transportation and infrastructure purposes, rated Aa3 by Moody's and AA by Standard & Poor's and Fitch. Institutional pricing is expected Tuesday. Pricing details were not available by press time.

On Friday, the Municipal Market Data scale ended steady for the fourth consecutive trading session. The 10-year yield finished flat at 1.48%, one basis point above the 1.47% record low set Nov. 28. The 30-year yield ended unchanged at 2.48%, dangling above its record low of 2.47% set Nov. 28. The two-year finished flat at 0.30% for the 50th consecutive trading session.

Treasuries were steady Monday afternoon. The benchmark 10-year yield and the 30-year yield traded flat at 1.63% and 2.81%, respectively. The two-year was also steady at 0.25%.

While there are still a few weeks left in the year, market participants say 2012 will finish as another great year for municipal bonds. "Reaching historically low nominal yields, 2012 saw the municipal bond market continue as a flight to quality and income-generating asset class," said JR Rieger, vice president of fixed income at Standard & Poor's Dow Jones Indices. "But, relative to other fixed-income asset classes, municipal bonds have generated higher yields on a taxable-equivalent yield basis. Low supply of new issues versus high demand for tax-exempt, income-generating assets sustained an imbalance that pushed prices higher."

Looking to 2013, Rieger added munis will be affected by the uncertainty of tax code changes and the tax treatment of munis. "If any new issue would be taxable as opposed to tax-free at the federal level, demand would increase for tax-exempt bonds already in the secondary market or if the tax-exempt status was to be reduced for high income investors that could have the opposite effect."

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