The municipal market tone remains firm Wednesday, stemming from pent-up post-Independence Day momentum.

Some of the larger new issuance has come in at aggressive levels, but buyers are biting. Other traders continue to find opportunities in earlier issues, a trader in New York said.

"There was considerable spread widening a couple of weeks ago, and that has rectified itself as supply has waned," he said. "There's been a pretty firm bid."

Tax-exempt yields continue to firm, starting at the belly of the curve. They are steady through seven years, according to the Municipal Market Data scale.

Yields from eight to 14 years are flat to two basis points lower. Beyond 14 years, they are down one to three basis points.

Triple-A yields on Tuesday repeated the performance of Monday's session across the curve. The 10-year triple-A yield slipped two basis points on Tuesday to 1.78%. The 30-year fell three basis points on the day to 3.06%. The two-year held at 0.32% for the 27th consecutive session.

Treasury yields have started Wednesday's session mostly flat. The benchmark 10-year yield has ticked down one basis point to 1.50%. The two-year and 30-year yields have held steady at 0.28% and 2.60%, respectively.

"It looks like spreads are normalizing and supply is being accepted a lot easier than it was a couple of weeks ago," the trader said. "I'm not sure if that's the [July 1 reinvestment] money. We've bumped the last couple of days and it doesn't look like it's stopping."

Muni supply is expected to recover from last week, when the midweek holiday led to little issuance and activity in the market. Industry estimates anticipate $7.07 billion should reach the market. That compares with a sparse $105.7 million of volume during the week of the Fourth of July holiday.

On the negotiated docket for Wednesday, JPMorgan, in the week's largest deal, is expected to price $850 million of New York City Transitional Finance Authority building aid revenue bonds. The retail order period was held Tuesday.

Citi plans to price $399 million of Las Vegas Water District general obligation bonds, limited-tax bonds, revenue refunding bonds and revenue water bonds. Also, Goldman, Sachs & Co., expects to price $335.9 million of water and wastewater system revenue bonds from Austin and Travis, Williamson and Hays counties in Texas.

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