The tax-exempt market got off to a rather slow start Monday morning as traders said this holiday-shortened week is unlikely to see a lot of activity.

Traders said Monday and Tuesday will be the only days this week with significant trading, but with yields at record lows, the market is taking a breather.

"It's kind of slow," a New York trader said. "There is still buying though in higher-yield bonds."

In the primary market this week, $2.25 billion is expected to be priced, down from last week's revised $6.03 billion. On the negotiated calendar, $1.97 billion is expected to be issued, down from last week's revised $3.95 billion. In competitive sales, $276 million should be auctioned, down from last week's revised $2.08 billion.

On the negotiated calendar, JPMorgan is expected to price $1 billion of Texas Municipal Gas Acquisition and Supply Corp. gas-supply revenue bonds, rated A3 by Moody's Investors Service and BBB by Standard & Poor's.

JPMorgan also is expected to price for retail $143.5 million of Connecticut Housing Finance Authority housing mortgage finance program bonds, rated triple-A by Moody's and Standard & Poor's. Institutional pricing is expected Tuesday.

Jefferies & Co. is expected to price for retail $90 million of University of Connecticut bonds, rated Aa2 by Moody's and AA-minus by Standard & Poor's. Institutional pricing is expected Tuesday.

The Municipal Market Data scale set new record low yields with each passing day throughout the last week. On Friday, the 10-year yield dropped one basis point to a record low of 1.50%, beating the previous record of 1.51% set Thursday. Before that, the MMD record was 1.54% set Wednesday and the 1.55% set Tuesday.

The 30-year MMD yield also fell one basis point to 2.54%, setting a record low. The previous record was 2.55% set Thursday and before that, 2.60% set Wednesday and 2.64% set Tuesday.

The two-year finished steady at 0.30% for the 36th consecutive trading session.

Treasuries were weaker Monday morning. The benchmark 10-year yield and the 30-year yield increased four basis points each to 1.62% and 2.77%, respectively. The two-year was steady at 0.24%.

In economic news, existing home sales rose 2.1% to a 4.79 million-unit rate in October. The number beat economists' expectations of a 4.75 million rate.

"The evidence continues to build that the housing market has turned the corner and it appears that the recovery is running ahead of our expectations and should perhaps be described as moderate rather than modest," wrote economists at RDQ Economics. "Apart from the Northeast, where Hurricane Sandy may have postponed some closings at the end of the month, the major geographical regions show an acceleration in the pace of sales over the last three months compared to the last year."

They added, "The greatest threat to the housing market would now appear to be external to the market. If the fiscal cliff negotiations fail and the economy falls into recession, unemployment would rise sharply, which would boost mortgage delinquencies. However, the internals of the market appear to be on a welcome improving trend."

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