The tax-exempt market slowed Friday afternoon as most market participants had completed their trades for the week. Munis were steady to slightly weaker, traders said, but said the market could firm again next week.
"There was firmer trading this morning and then it quieted down," a New York trader said. "I think the week is over. Munis might be following Treasuries a little but there is not a lot going around. It may be off one or two basis points depending on what it is."
He added that next week's supply should not scare off investors. "The big deal next week is a New York deal and then away from that there is not a lot of supply," he said. "And there is still August reinvestment money that will hit and it's not as big as June or July but it should still be OK as long as Treasuries don't fall totally out of it."
Munis were weaker Friday afternoon, according to the Municipal Market Data scale. Yields inside four years were steady while the five- to 10-year yields jumped two basis points. Outside 11 years, yields spiked between one and three basis points.
On Thursday, the two-year yield dropped two basis points to 0.29%. The 10-year closed down one basis point to 1.60%, setting a record low as recorded by MMD. The previous record was 1.61% set Wednesday. The 30-year yield ended the day at 2.79%, remaining at its record low for the second session.
Until Friday, munis were steady to firmer for the past 24 consecutive trading sessions. Since the recent rally began on June 22, the 10-year has fallen 26 basis points while the 30-year yield has plunged 37 basis points.
Treasuries continued to weaken Friday afternoon. The benchmark 10-year yield soared 10 basis points to 1.53% while the 30-year yield spiked 11 basis points to 2.60%. The two-year rose two basis points to 0.26%.
In the primary market next week, $5.62 billion is expected to be priced, up from this week's revised $5.21 billion. In the negotiated market, $4.16 billion is expected to come to market, up from this week's revised $3.35 billion. On the competitive calendar, $1.46 billion is expected to be auctioned, down slightly from this week's revised $1.86 billion.