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.

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