The tax-exempt market was showing signs of strengthening in the morning, but started to turn quiet by the afternoon.
A Chicago trader said he completed trades in the morning that were a little bit stronger, but cautioned against trying to force anything to get done.
"I've had a couple of trades but if you try to force it you're not going to get rewarded," a Chicago trader said. "So I think it's an order-driven business that's coming in and that's great if you can get something coming your way. But you can't force it to happen today."
"If you're trying to push stuff in you're getting a different reception than if someone comes to you and bids you down a few basis points from yesterday," he added. "Forcing action is unsuccessful."
Still, all eyes were looking ahead to Friday to the Fed's annual symposium at Jackson Hole. "All of the headlines have varying degrees of impact and anything that is going to cause jobs or housing ultimately to change course will impact us," the trader said.
In the primary market, most of the week's largest deals were priced Tuesday, although none topped $100 million. Piper Jaffray & Co. priced $90 million of California's Ohlone Community College GO refunding bonds, rated Aa2 by Moody's Investors Service and AA by Standard & Poor's. Pricing details were not yet available.
Bank of America Merrill Lynch priced $70 million of Wisconsin Health and Educational Facilities Authority revenue bonds, rated A1 by Moody's and A-plus by Standard & Poor's and Fitch Ratings.
Yields ranged from 0.77% with a 2% coupon in 2013 to 4.05% with a 5% coupon in 2044. The bonds are callable at par in 2022.
On Monday, the 10-year Municipal Market Data yield and the 30-year yield dropped three basis points each to 1.76% and 2.90%, respectively. The two-year closed at 0.29% for the 23rd consecutive session.
Since munis began the most recent rally on Aug. 21, the 10-year yield has plummeted 14 basis points while the 30-year yield has plunged 12 basis points, pushing yields down to levels not seen since early August.
The 10-year MMD yield is now trading 16 basis points above its record low of 1.60% set July 26 and the 30-year yield is hovering 11 basis points above the 2.79% record low set July 25.
Treasuries continued to post gains for the second straight trading session. The benchmark 10-year yield and the 30-year yield fell two basis points each to 1.63% and 2.74%, respectively. The two-year was steady at 0.28%.