The tax-exempt market followed Treasuries lower as the risk-on trade dominated the markets.
While Treasuries have been weaker in each trading session this week, munis were able to hold relatively steady. Wednesday morning, munis appeared to give up that steady tone and headed lower.
One New York trader said muni yields were higher. "And activity is picking up a little."
The weaker market comes as many deals are expected to price in the new-issue market Wednesday. Citi is expected to price $105 million of County of Suffolk tax anticipation notes, rated SP-1 by Standard & Poor's and F-1 by Fitch Ratings.
In the competitive market, the Iowa Board of Regents is expected to auction $190 million of hospital revenue bonds for the University of Iowa hospitals and clinics. The bonds are rated Aa2 by Moody's and AA by Standard & Poor's.
On Tuesday, the 10-year Municipal Market Data yield jumped two basis points to 1.81% while the 30-year yield increased one basis point to 2.94%. The two-year closed at 0.29% for the 33rd consecutive session.
Treasuries were much weaker as the Federal Open Market Committee started its first of a two-day meeting. The benchmark 10-year yield jumped six basis points to 1.76% while the 30-year yield soared eight basis points to 2.92%. The two-year yield fell one basis point to 0.25%.