Market Post: Friday Fatigue Sets In as Traders Look to June 1 Money

The Friday afternoon malaise in the tax-exempt market took hold as traders looked to next week's offerings and June 1 reinvestment money.

"I like taxable munis right now with the nice back up in Treasury yields," a trader in Ohio said. "I'm still not a fan of tax-exempts but as long as sellers aren't too proud of their offerings I could see the secondary market doing okay next week thanks to June 1 reinvestment money and seemingly manageable supply expected, despite the underwhelming muni-to-Treasury ratios."

With the back-up in yields this week, secondary trading activity fell. In retail trades of under 100 bonds, there were 47,997 buy trades, down the from previous week's 58,287, according to BondDesk Group. There were 28,454 sell trades, down from the previous week's 35,914.

Par value of buy trades was $1.293 billion, down from the previous week's $1.612 billion. Sell trades came in at $783 million, down from $994 million.

Thursday, yields on the Municipal Market Data scale ended as much as two basis points higher. The 30-year yield increased two basis points to 3.22%. The 10-year was steady at 2.07% and the two-year finished flat at 0.29% for the fifth session.

Yields on the Municipal Market Advisors 5% scale ended as much as one basis point higher. The 10-year and 30-year yields rose one basis point each to 2.12% and 3.32%, respectively. The two-year finished steady at 0.36%.

Treasuries continued to weaken into the afternoon trading session. The benchmark 10-year yield jumped seven basis points to 2.19% and the 30-year yield increased six basis points to 3.34%. The two-year yield rose two basis points to 0.32%.

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