The tax-exempt market continued to weaken Thursday as munis look expensive to Treasuries and buyers waited on the sidelines for rates to increase.
"It is not good," a North Carolina trader said. "It's definitely weaker and a very thin market. There is not a lot of depth to any bidding."
This trader added munis look expensive to Treasuries and need a correction to draw in buyers.
The secondary market is also quiet as buyers look to the primary. "From the buy side, they are predominantly focused on the primary. So everything they are looking for is getting met."
In the primary, Goldman, Sachs & Co. priced $157.8 million of Louisiana general obligation refunding bonds, rated double-A by the rating agencies.
Barclays priced $117 million of Massachusetts Housing Finance Agency housing bonds, rated double-A-minus by the rating agencies.
Yields ranged from 0.25% with a 5% coupon in 2014 to 2.56% with a 5% coupon in 2026. Bonds maturing in 2013 were offered via sealed bid. The bonds are callable at par in 2023.
Wednesday, yields on the Municipal Market Data scale were as much as two basis points weaker. The 10-year and 30-year yields increased two basis points each to 1.86% and 3.04%, respectively. The two-year held steady at 0.28% for the 10th session.
The Municipal Market Advisors 5% scale showed yields rising as much as four basis points Wednesday. The 10-year and 30-year yields increased three basis points each to 1.93% and 3.15%. The two-year yield held steady at 0.33% for the ninth consecutive session.
Treasuries turned softer Thursday afternoon and initially posting gains in the morning session. The benchmark 10-year yield rose one basis point to 2.04%. The two-year and 30-year yields were flat at 0.26% and 3.21%, respectively.