NEW YORK – Tax-exempt traders agree the muni rally is officially over as munis are very weak Thursday afternoon and activity is quieting down.

“Munis are very weak and we are seeing 10 basis point cuts,” a New York trader said, referring to prices. “It’s really quiet.”

Muni were weaker Thursday afternoon, according to the Municipal Market Data scale. Yields inside four years were steady. The five-year yield rose between one and three basis points. Outside six years, yields increased between two and six basis points.

The weakening comes after the 10-year and 30-year muni yields broke record lows for the sixth consecutive trading session Wednesday. Since that streak began on Jan. 10, yields have fallen 15 and 25 basis points, respectively.

On Wednesday, the 10-year yield closed down two basis points to 1.67%, beating the previous record of 1.69% as recorded by MMD Tuesday. The 30-year dropped two basis points to 3.15%, beating the previous record of 3.17% registered on Tuesday. The two-year closed steady at 0.35% for its fourth consecutive trading session.

Treasuries were taking a hit Thursday afternoon and erased all gains made since Jan. 10. The two-year yield rose two basis points to 0.25%, and the benchmark 10-year year yield jumped eight basis points to 1.98%. The 30-year yield spiked nine basis points to 3.04%.

In the primary market, Morgan Stanley held a preliminary pricing on $201.34 million of Fairfax County, Va., public improvement refunding bonds, rated triple-A by the rating agencies.

Yields ranged from 0.35% with a 3% coupon in 2014 to 1.94% with a 5% coupon in 2024.

This deal comes after Citi won the competitive bid for $218 million of Fairfax County, Va., public improvement bonds Wednesday.

In the competitive market, the University System of Maryland auctioned $70 million of revenue bonds in two pricings. Morgan Stanley won the bid for the first pricing of $45.83 million and Robert W. Baird won the bid for the $24.05 million deal. The credit is rated AA-plus by Standard & Poor’s. Pricing information was not available by press time.

In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed weakening Thursday from just a day prior.

A dealer sold to a customer Municipal Electric Authority of Georgia 6.637s of 2057 at 6.09%, 12 basis points higher than where they traded Wednesday. Another dealer sold to a customer Illinois 4.25s of 2035 at 4.32%, seven basis points higher than where they traded the day before.

Bonds from an interdealer trade of California Economic Recovery 5s of 2022 yielded 1.31%, nine basis points higher than where they traded the day before. A dealer bought from a customer New York Liberty Development Corp. 5s of 2044 at 4.31%, seven basis points higher than where they traded Wednesday.

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