The tax-exempt market opened with lighter activity as traders said bond yields were flat to two basis points higher.

Large bid lists didn't surface Thursday morning and traders said most of the selling ahead of expected outflows from muni bond funds happened earlier in the week.

"It might be marginally weaker but we are not seeing enough to call it changed," a New York trader said. "I am wondering whether people have sold enough out of the outflows to have a decent cushion for the next few days."

Still, Puerto Rico is the wild card this week, the trader said, and could push outflows to accelerate.

In the primary market Thursday, JPMorgan is expected to price for institutions $662.2 million of New York City Housing Development Corp. capital fund grant program revenue bonds, rated AA-minus by Standard & Poor's.

In retail pricing Wednesday, yields on the first series of $188.4 million ranged from 1.17% with a 3% coupon in 2016 to 4.14% with a 4% and 5% coupon in a split 2025 maturity. Bonds maturing in 2014 and 2015 were offered via sealed bid. The bonds are callable at par in 2023. Yields were lowered between one and three basis points on bonds maturing beyond 2019 from pre-marketing levels.

Bonds on the second series of $473.8 million yielded 4.70% with a 5% coupon in 2029 and 5.03% with a 5% coupon in 2033. Bonds maturing in 2014 and 2015 were offered via sealed bid. Bonds maturing between 2016 and 2032 were not offered for retail. The bonds are callable at par in 2023. Yields were lowered four and three basis points from pre-marketing levels on bonds maturing in 2029 and 2033, respectively.

Wednesday, yields on the triple-A Municipal Market Data scale ended as much as two basis points weaker. The 10-year yield rose one basis point to 2.94% and the 30-year yield climbed two basis points to 4.45%. The two-year finished flat at 0.43% for the 31st straight session.

Yields on the Municipal Market Advisors scale ended as much as two basis points higher. The 30-year yield rose one basis point to 4.54%. The 10-year was flat at 3.08% and the two-year closed unchanged at 0.55% for the 10th session.

Treasuries were flat. The 10-year and 30-year yields were steady at 2.79% and 3.75%, respectively. The two-year was unchanged at 0.40%.

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