The tax-exempt market continued to head lower, following Treasuries, although trading activity started to slow from the morning as the weekend approaches.
"Munis are weaker but the selloff isn't as big as Treasuries," a New York trader said. "I think it's pretty much directed from Treasuries backing up dramatically as well as the building of the muni new issue calendar which is putting an extra twist in it."
Even with yields rising, this trader said volume is taking to the sidelines as traders wait for prices to settle in. "We had a nice move Thursday and the move is even bigger today," he said. "So people are hesitant to come in and waiting longer to see if they can come in cheaper." The trader added it's Friday so volume is also slowing down as traders break for the weekend.
Next week's activity should pick up the trader added. "People in the muni world are sitting tight to see where things settle in and what preliminary pricing guidance for the deals will be."
On Thursday, the 10-year Municipal Market Data yield finished steady at 1.84% while the 30-year yield closed flat at 2.98%. The two-year closed at 0.29% for the 35th consecutive session.
Treasuries continued to weaken. The benchmark 10-year yield jumped 12 basis points to 1.86% while the 30-year yield soared 13 basis points to 3.08%. The two-year increased one basis point to 0.26%.
In the primary next week, the municipal market can expect $8.64 billion in bonds, up from this week's revised $4.04 billion. On the negotiated calendar, $7.64 billion is expected to come to market, up from this week's revised $2.7 billion. On the competitive side, $998.7 million is expected, up from this week's revised $1.34 billion.