NEW YORK - The tax-exempt market was getting off to a better start than most had expected Monday morning. There was buying as investors took advantage of a silent primary market.

Due to the Fourth of July holiday on Wednesday, traders said the rest of the week is expected to be very quiet.

"There is buying," a New York trader said. "I think today is going to be the busiest for the week."

The Municipal Market Data scale was not updated by press time. On Friday, the 10-year yield ended flat at 1.86% for the 11th trading session while the two-year ended steady at 0.32% for the 21st straight session. The 30-year yield finished flat at 3.16% for the sixth session.

Over the course of June, yields jumped as supply outweighed demand. The 10-year yield spiked up 11 basis points from 1.75%, where it started the month. The 30-year yield jumped 12 basis points from 3.04% on June 1. The two-year was flat during the month.

Treasuries were firmer Monday morning. The benchmark 10-year yield and the 30-year yield each dropped five basis points to 1.60% and 2.71%, respectively. The two-year yield fell one basis point to 0.31%.

As the month of June came to an end last week, muni-to-Treasury ratios fell as munis outperformed Treasuries and became comparatively more expensive. The two-year ratio plunged to 100% at the end of June from 123.1% on June 1. The 10-year ratio fell to 112.7% from 119.9% at the start of the month. The 30-year ratio dropped to 114.5% on June 29 from 120.6% at the beginning of June.

The slope of the yield curve widened throughout June as too much supply overwhelmed demand. The one- to 30-year slope widened to 296 basis points from 284 basis points at the beginning of the month. The one- to 10-year slope also widened to 166 basis points from 155 basis points.

Credit spreads also widened throughout the month. The 10-year triple-A to single-A spread widened to 79 basis points at the end of June from 78 basis points at the start of the month. The 30-year spread jumped to 80 basis points from 75 basis points. The two-year triple-A to single-A spread held steady at 39 basis points.

In the primary market this week, $51.7 million is expected to come to market, down from last week's revised $7.86 billion. In the negotiated market, $12 million is on the calendar, down from last week's revised $6.29 billion. On the competitive side, $39.7 million is expected to be priced, down from last week's revised $1.57 billion.

In economic news, the ISM manufacturing index slipped to 49.7 in June from 53.5 in May, the first time it contracted since July 2009. The fall was bigger than the drop to 52 that economists had predicted.

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