The tax-exempt market continued to weaken Wednesday morning, following a substantial selloff Tuesday, as too much supply flooded the market and forced underwriters to lower prices.
"Yields are going to continue to rise," a New York trader said, adding there is a bit of a selloff in the morning trading session. "But it's kind of slow."
In the primary market Wednesday, Jefferies & Co. is expected to price for retail $904.3 million of New York's Triborough Bridge and Tunnel Authority bonds. Institutional pricing is expected Thursday.
The $638 million of subordinate revenue bonds are rated A1 by Moody's Investors Service and A-plus by Standard & Poor's and Fitch Ratings.
The $266.3 million of general revenue bonds are rated Aa3 by Moody's and AA-minus by Standard & Poor's and Fitch.
RBC Capital Markets is expected to price $466.3 million of Colorado Regional Transportation District sales tax revenue bonds, rated Aa2 by Moody's, AA-plus by Standard & Poor's, and AA by Fitch.
In the competitive market, triple-A rated Georgia is expected to auction $292.9 million of general obligation bonds in two pricings - $57.99 million and $234.9 million.
On Tuesday, the Municipal Market Data scale ended as much as eight basis points weaker. The 10-year yield jumped eight basis points to 1.58% and now hovers 11 basis points above its record low of 1.47% set Nov. 28.
The 30-year MMD yield spiked up five basis points to 2.55%, trading eight basis points above its record low of 2.47% set Nov. 28.
The two-year finished flat at 0.30% for the 52nd consecutive trading session.
Treasuries continued to weaken Wednesday after clocking in losses Tuesday. The benchmark 10-year yield jumped two basis points to 1.67% while the 30-year yield spiked up three basis points to 2.86%. The two-year was steady at 0.25%.
In economic news, the FOMC will announce its rate policy decision at 12:30 p.m., Eastern time, followed by release of its summary economic projections at 2 and a press conference with Fed Chairman Ben Bernanke at 2:15.