The tax-exempt market saw mixed trading Wednesday afternoon as traders said the market appeared stronger in states that lacked supply while the tone of the market was weaker in states hit with supply this week.

Traders said the market was focused on the primary as the secondary took a backseat. It's now or never as traders expect supply to drop off significantly as the holidays approach.

"California GOs had a stronger bid today and are up from yesterday," a Los Angeles trader said. "In California and some west coast states, there is not a lot of supply. Most of the supply is out in Texas, New Jersey, and New York so there is some activity on the West Coast but it's slowing down. There's a weaker tone in certain states with a lot of supply."

He added the focus is on the primary. "Customer interest has waned in the secondary due to the amount of primary that's hitting the market. Basically it's getting hard to focus on spreads. It's extremely tight in the five- to 10-year range."

He added Treasuries have a stable tone and munis are following. "It's strong weakness. And complete apathy and lack of interest in the levels that are out there."

In the primary market, RBC Capital Markets priced $221.9 million of New Mexico Finance Authority state transportation refunding revenue bonds, rated Aa1 by Moody's Investors Service and AAA by Standard & Poor's.

Yields ranged from 0.45% with a 3% coupon in 2015 to 2.05% with a 4% coupon in 2026. Bonds maturing in 2013 were offered via sealed bid. The bonds are callable at par in 2022.

In the competitive market, the Port Authority of New York and New Jersey auctioned $595 million of consolidated revenue bonds in two series, rated Aa3 by Moody's and AA-minus by Standard & Poor's and Fitch Ratings.

Bank of America Merrill Lynch won the bid for $425 million. Yields ranged from 0.215% with a 4% coupon in 2013 to 3.40% with a 3.25% coupon in 2042. The bonds are callable at par in 2022.

Citi won the bid for $170 million. Pricing information was not yet available.

On Tuesday, the Municipal Market Data scale ended steady. The 10-year yield finished flat at 1.48%, one basis point above the 1.47% record low set Nov. 28. The 30-year yield ended unchanged at 2.48%, dangling above its record low of 2.47% set Nov. 28. The two-year finished flat at 0.30% for the 47th consecutive trading session.

Treasuries were mostly steady in Wednesday afternoon trading. The two-year and 30-year yields were flat at 0.25% and 2.78%, respectively. The benchmark 10-year yield fell one basis point to 1.60%.

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