The tax-exempt market opened Friday morning on strong footing but starting to pare back gains Friday afternoon, following Treasuries.

"We are in limbo at the moment," a Chicago trader said. "We are treading water. The market overall was up this morning and people felt a lot better but they are less enamored now."

He added that despite negative GDP and higher unemployment, stocks are higher and putting pressure on fixed-income assets across the board.

Municipal bond market reads showed a stronger market Thursday after weakening Monday through Wednesday.

Yields on the Municipal Market Data triple-A GO scale fell Thursday. The 30-year dropped one basis point to 2.86%. The 10-year finished flat at 1.82% while the two-year closed steady at 0.34% for the fourth session.

The Municipal Market Advisors 5% coupon triple-A benchmark scale also showed steady to lower yields Thursday. The 10-year yield and the 30-year yield finished steady at 1.84% and 2.94%, respectively. The two-year held steady at 0.35% for the fourth session.

After posting gains Friday morning, Treasuries were weaker in the afternoon. The benchmark 10-year yield jumped two basis points to 1.99% while the 30-year yield increased three basis points to 3.20%. The two-year yield was still stronger, falling one basis point to 0.27%.

In the primary market next week, the municipal bond market can expected $4.79 billion in new issuance, up from this week's revised $5.98 billion. In negotiated deals, $2.96 billion is expected to hit the market, up from this week's revised $4.38 billion. On the competitive calendar, $1.83 billion is expected to be auctioned, up from this week's revised $1.60 billion.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.