The tax-exempt market continued to head lower as muni yields backed up with Treasuries.

Traders seem to agree that munis are following the direction of Treasuries as limited primary issuance and a stale secondary aren't providing much direction. "I am hearing, seeing, and feeling all of the above," one New Jersey trader said, adding activity is better in the secondary market than it was earlier in the week, but lower Treasuries are the driving force behind lower munis.

"There are some bids-wanted but it's stale in the secondary," he said. "There is nothing new to note on the new issue side. I would say there are still some bonds left on the books."

He also added that while the market is anticipating the Federal Open Market Committee announcement Thursday, munis are following the direction of Treasuries more. "Treasuries will have more of an affect than the meeting."

Citi priced $105 million of County of Suffolk tax anticipation notes, rated SP-1 by Standard & Poor's and F-1 by Fitch Ratings. Prices were not available by press time.

Morgan Stanley priced and repriced $87.4 million of Jacksonville Port Authority revenue refunding bonds, subject to the alternative minimum tax. The bonds are rated A2 by Moody's Investors Service and A by Fitch.

Yields ranged from 2.95% with a 4% coupon in 2020 to 4.25% with a 5% coupon in 2038. The bonds are callable at par in 2022. Yields were lowered five and seven basis points on long end.

In the competitive market, JPMorgan won the bid for $190 million of Iowa Board of Regents 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. The bonds had coupons ranging from 4% in 2014 to 4% in 2038. Prices were not yet available.

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 continued to weaken as stocks soared on positive Eurozone news and the start of the Federal Open Market Committee's 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%.

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