The tax-exempt market showed signs of slight weakening Friday afternoon though traders said it was not as weak as many thought.
"It should be weaker but it's not really," a Chicago trader said. "Customers put out four offerings and they were all gone within five minutes and none were particularly cheap. So it's a little weaker but not formidable."
He added 10-year muni yields are particularly attractive now compared to 10-year Treasuries. "The spread has gotten a lot wider on the 10-year Treasury. So the Treasury market has weakened but munis are holding in there."
The market should have a better handle on where rates are going once more supply hits the market next week, the trader added.
The Municipal Market Data scale finished Thursday mostly steady after weakening Wednesday. The 30-year yield rose one basis points to 2.87%. The two-year and 10-year yields finished flat at 0.36% and 1.78%, respectively.
Treasuries were slightly weaker Friday afternoon though they recouped much of losses from the morning session. The benchmark 10-year yield increased two basis points to 1.93%. The two-year and 30-year yields were steady at 0.28% and 3.12%, respectively.
In the primary market next week, $2.7 billion of muni bonds are expected to come to market, up from this week's revised $11.7 million. In the negotiated market, $1.72 billion is expected to price, up from this week's revised $4 million. On the competitive calendar, $1.02 billion should be auctioned, up from this week's revised $7.7 million.