The tax-exempt market opened weaker Friday morning as selling pressure pushed municipal bond yields higher, extending the fallout from Federal Reserve Chairman Ben Bernanke's comments Wednesday.
"It's bad again," a Chicago trader said. "Bid lists are huge. There are several lists over $100 million."
The losses were focused in the secondary market after a 20-basis-point-selloff Thursday forced primary issuers out of the market.
The biggest deal expected to price this week, $763 million of California Health Facilities Financing Authority was postponed due to market conditions. New York's Metropolitan Transportation Authority also put its $350 million deal on day-to-day status.
California's City of Hope postponed a $250 million taxable general obligation note sale.
Philadelphia was expected to issue $400 million of GOs next week and delayed the sale to an undetermined date due to market volatility.
Thursday, yields on the Municipal Market Data scale ended as much as 20 basis points higher. The 10-year and 30-year yields spiked 20 basis points each to 2.48% and 3.78%, respectively. The two-year yield rose five basis points to 0.37%.
Yields on the Municipal Market Advisors 5% scale closed as much as 21 basis points higher. The 10-year jumped 21 basis points to 2.60% and the 30-year yield spiked 19 basis points to 3.88%. The two-year yield rose eight basis points to 0.47%.
Treasuries headed lower again Friday morning. The two-year yield increased two basis points to 0.35% and the benchmark 10-year yield rose three basis points to 2.43%. The 30-year yield rose one basis point to 3.50%.