NEW YORK – The tax-exempt market is flat to weaker, but deals in the primary market are still seeing decent reception.

Muni yields are rising a little, though not as much as Treasury yields.

“The market is flat to a smidge weaker,” a Chicago trader said. “It’s like a shot glass weaker.”

He added the muni market is running on supply and demand factors and will rally on limited supply and fears from Europe. “We have a chance now to have a favorable supply situation and now the 10-year Treasury is selling off a little but we may hold our own. So overall, we will do better than Treasuries.”

He added the Chicago water deal is doing well in the primary market. “It did well in the first pricing and they bumped prices,” he said, referring to the $407 million Chicago water revenue bonds priced by Siebert Brandford Shank & Co.

Munis were mixed in Thursday afternoon trading, according to the Municipal Market Data scale. Yields inside two years were steady while the three- and four-year yields fell as much as two basis points. The five-year yield was steady while yields outside six years rose one and two basis points.

On Wednesday, the two-year yield closed flat at 0.31% for the 16th consecutive trading session. The 10-year yield finished at 1.74% while the 30-year yield closed at 3.08%.

The 10-year hadn’t hit 1.74% since Feb. 2 when it yielded 1.69%. It remains six basis points above its record low of 1.68% set Jan. 31. The 30-year beat its previous record low of 3.09% set Tuesday which beat the prior record of 3.13% set Monday. Before this week, the record low was 3.14% last hit on Feb. 2.

Treasuries were weaker, although pared some losses from the morning session. The benchmark 10-year yield jumped six basis points to 1.90% while the 30-year yield increased three basis points to 3.07%.

In the primary market, Siebert Brandford Shank & Co. priced $407.5 million of Chicago second-lien water revenue bonds, rated Aa3 by Moody’s Investors Service, AA-minus by Standard & Poor’s and AA by Fitch Ratings.

Yields ranged from 0.96% with 4% and 5% coupons in a split 2016 maturity to 3.65% with a 5% coupon in 2042. The bonds are callable at par in 2022.

KeyBanc Capital Markets priced $375 million of Build Illinois taxable sales tax revenue bonds, rated AAA by Standard & Poor’s and AA-plus by Fitch. Pricing details were not yet available.

In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed weakening.

A dealer sold to a customer Regents of the University of California 4.858s of 2112 at 4.77%, six basis points higher than where they traded Tuesday.

Another dealer sold to a customer Houston 0.796s of 2015 at 0.83%, four basis points higher than where they traded last Thursday.

A dealer bought from a customer Michigan State Hospital Authority 2s of 2033 at 0.65%, two basis points higher than where they traded a week prior.

Bonds from an interdealer trade of Illinois 5s of 2022 yielded 3.37%, one basis point higher than where they traded Wednesday.

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