Municipal bonds continue to rally on a day when large new issues arrived for retail investors to pick over.

The $850 million New York City Transitional Finance Authority deal that paced the market arrived for a second day of retail with lower yields. Activity remains strong in the secondary, particularly among retail investors, a trader in Texas said.

"Retail has been pretty active," he said. "Looking at the MSRB trade count, we're seeing a lot of retail-type pieces going away. It looks like a pretty good market to us, like we're in for a little bit of a sustained rally here."

Tax-exempt yields have been firming all day, starting at the belly of the curve. They are steady through seven years, according to the Municipal Market Data scale.

Yields from eight to 13 years are flat to two basis points lower. Beyond 13 years, they have fallen one to four 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 crossed into the afternoon flat across the curve. The benchmark 10-year yield stands at 1.51%. The two-year and 30-year yields have held steady at 0.28% and 2.60%, respectively.

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.

JPMorgan priced for a second day of retail $850 million of New York City TFA building aid revenue bonds. They are rated Aa3 by Moody's Investors Service and AA-minus by Standard & Poor's and Fitch Ratings.

Yields range from 0.66% with coupons of 3.00% and 4.00% in a split maturity in 2015 to 4.02% with a 4.00% coupon in 2042. Debt maturing in 2014 was offered in a sealed bid.

No more retail orders are being accepted for credits maturing in 2025, 2026 and 2028 through 2031, as well as in 2035 and 2039. There are no more orders for credits maturing in 2016 through 2018, 2020, 2022, and 2023.

The bonds are callable at par in 2022. Yields fell between three and five basis points across the curve in available maturities.

Also, Goldman, Sachs & Co., priced for retail $337.7 million of water and wastewater system revenue refunding bonds from Austin and Travis, Williamson and Hays counties in Texas.

The bonds are rated Aa2 by Moody's, AA by Standard & Poor's, and AA-minus by Fitch.

Yields range from 0.52% with coupons of 1.00% and 4.00% in multiple maturities in 2014 to 2.65% with a 5.00% coupon in a split maturity in 2025. Debt maturing in 2013 was offered in a sealed bid.

Credits maturing in 2014 through 2016, as well as from 2025 through 2042 were not offered to retail. The bonds are callable at par in 2022.

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