The tax-exempt market prepared for a big day in the primary, with two $2 billion dollar deals expected to price later Wednesday. The Federal Open Market Committee released minutes of its March meeting earlier than expected. FOMC members acknowledged QE3 is having a "meaningful effect" on the markets, though members disagree on how long assets purchase should continue. The minutes said "a few" members already believe costs outweigh benefits and "would like to bring the program to a close relatively soon," while "a few others" said the risks may increase "fairly quickly with the size of the Federal Reserve's balance sheet" and expected to curb the asset buys "before long." Still, "many participants, including some of those who were focused on the increasing risks, expressed the view that continued solid improvement in the outlook for the labor market could prompt the Committee to slow the pace of purchases beginning at some point over the next several meetings, while a few participants suggested that economic conditions would likely justify continuing the program at its current pace at least until late in the year." Economists were quick to react. "Assuming economic activity continues to improve, it looks like the FOMC is leaning towards tapering later this year, which is in-line with our call," wrote Jennifer Lee, senior economist at BMO Capital Markets. "The topic of paring, tapering, slowing, of its asset purchases was becoming more mainstream. Yes, the benefits are still outweighing the costs but clearly, the risks will have to be monitored. So I'm stating the obvious here." Back in the municipal bond market, the two biggest deals of the week are expected to come to market. Bank of America Merrill Lynch and Morgan Stanley are expected to price for retail $2 billion of California various purpose general obligation bonds, rated A1 by Moody's Investors Service, A by Standard & Poor's, and A-minus by Fitch Ratings. Institutional pricing is expected Thursday. Barclays should price $2 billion of Florida Hurricane Catastrophe Fund Finance Corp. revenue bonds, rated Aa3 by Moody's, AA-minus by Standard & Poor's, and AA by Fitch. Morgan Stanley is expected to price $227.9 million of Tennessee's Metropolitan Government of Nashville and Davidson County water and sewer revenue bonds, rated Aa3 by Moody's and AA-minus by Standard & Poor's. JPMorgan is expected to price for retail $219.7 million of New York Mortgage Agency mortgage revenue bonds, consisting of $186.5 million of bonds and $33.2 million of bonds subject to the alternative minimum tax. The bonds are rated Aaa by Moody's. In the competitive market, Michigan is expected to auction $200 million of GOs, rated Aa2 by Moody's and AA-minus by Standard & Poor's. Municipal bond scales ended as much as one basis point weaker Tuesday after a steady to slightly firmer tone Monday. Yields on the Municipal Market Data triple-A GO scale as much as one basis point higher. The 10-year and 30-year yields increased one basis point each to 1.72% and 2.94%, respectively. The two-year closed steady at 0.29% for the third session. Yields on the Municipal Market Advisors 5% coupon triple-A benchmark scale ended as much as one basis point higher. The 30-year yield increased one basis point to 3.05%. The two-year and 10-year yields were steady at 0.32% and 1.79%, respectively, for the third session. Treasury yields continued to climb for the third session. The benchmark 10-year yield jumped three basis points to 1.79% and the 30-year yield increased five basis points to 2.99%. The two-year was steady at 0.23%.

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