The tax-exempt market continued to hold flat as traders were noticeably frustrated over the session which they described as a "nonevent."

With yields so low and the market waiting for news from the Federal Open Market Committee on Thursday, the municipal bond market is in limbo.

"I think if people can find a way not to do business and somehow wait, they are doing that," a Chicago trader said. "If someone comes in and wants your bonds and you want to force liquidity, you're going to pay for that. If you're trying to make something happen you're not going to get what you're looking for."

He added the market is irritated over the lack of activity. "It's frustrating because relative to other things out there, our asset class could be considered attractive but absolute rates are a problem and there is so much external noise that could push us one way or the other."

Still, there is a perceived avalanche of supply, but traders have yet to experience it. "The word is the calendar is building but it's just not here right now," the trader said. "So you just deal with what you have in front of you. And I'm just not getting a lot done."

In the primary market, Barclays priced $156.3 million of Texas general obligation and water financial assistance bonds, rated triple-A by Moody's Investors Service and Fitch Ratings and AA-plus by Standard & Poor's.

Yields ranged from 0.26% with a 2% coupon in 2013 to 3.62% with a 3.5% coupon and 3.52% with a 4% coupon and 3.14% with a 5% coupon in a split 2041 maturity. The bonds are callable at par in 2022.

In the competitive market, JPMorgan won the bid for $197 million of Arkansas federal highway grant anticipation and tax revenue general obligation bonds, rated Aa1 by Moody's and AA by Standard & Poor's.

Yields ranged from 0.35% and 0.37% with 5% coupons in a split 2015 maturity to 1.63% and 1.69% with 5% coupons in a split 2021 maturity. Credits maturing between 2022 and 2024 were not formally re-offered. The bonds are callable at par in 2022.

Bank of America Merrill Lynch won the bid for $171.9 million of Missouri state water pollution and fourth state building GO refunding bonds in two series. The bonds are rated triple-A by the three major rating agencies.

Yields on the first series, $65.8 million of state water pollution control GO refunding bonds, ranged from 0.20% with a 3% coupon in 2013 to 1.27% with a 3% coupon in 2019.

Yields on the second series, $106.1 million of fourth state building GO refunding bonds, ranged from 0.20% with a 3% coupon in 2013 to 1.71% with a 2% coupon in 2021.

On Monday, the 10-year Municipal Market Data yield and the 30-year yield rose one basis each to 1.79% and 2.93%, respectively. The two-year closed at 0.29% for the 32nd consecutive session.

Treasuries were weaker Tuesday afternoon. The benchmark 10-year yield and the 30-year yield rose one basis point each to 1.69% and 2.84%, respectively. The two-year was steady at 0.26%.

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