Activity in the tax-exempt market started to slow Friday afternoon as traders left early for the three-day weekend.

Traders were looking ahead to next week's increase in supply to get the market moving again.

"Heading into the holiday weekend it's already starting to slow," a Virginia trader said. "It's pretty light and steady."

He added the market had a confusing tone this week. "There were mixed signals and conflicting technicals in the market this week," he said. "The supply picture and activity on bid-wanted said it was active and vibrant this week but the scale is soft and the larger activity of $5 million to $10 million blocks aren't trading. It's a very confusing market."

On Thursday, municipal bond market scales finished steady to a few basis points stronger.

The Municipal Market Data triple-A GO scale ended flat to one basis point firmer. The 10-year yield fell one basis point to 1.84% while the 30-year yield finished steady for the second session at 2.92%. The two-year was steady at 0.32% for the fourth session.

The Municipal Market Advisors 5% coupon triple-A benchmark scale ended mostly steady, though some yields rose and some yields fell as much as two basis points throughout the curve. The 10-year yield finished steady at 1.87% while the 30-year yield closed flat at 2.99%. The two-year closed unchanged at 0.35% for the 14th session.

Treasuries were weaker Friday after two sessions of gains. The benchmark 10-year yield jumped three basis points to 2.03% while the 30-year yield increased two basis points to 3.20%. The two-year rose one basis point to 0.28%.

In the primary market next week, $6.67 billion is expected to be priced, up from this week's revised $5.92 billion. On the negotiated calendar, $4.42 billion should be issued, up from this week's revised $3.45 billion. In the competitive market, $2.25 billion is expected to be auctioned, down from this week's revised $2.47 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.