Tax-exempts continued to cheapen Friday afternoon as traders said munis separated from Treasuries and were not following their taxable counterparts higher.

Treasuries were stronger Friday afternoon but munis continued to weaken under the weight of supply.

"It's a little quieter today and that's more due to lighter activity," a Virginia trader said. "There was such a heavy primary calendar that munis became disconnected to Treasuries. We saw a little fizzle in the equity rally and Treasuries came back but there are still plenty of bid lists."

Overall for the week this trader characterized it as "OK but not great" in terms of balances left on deals. "High-grade down saw sizeable concessions."

On Thursday, municipal bond market scales ended weaker for the fourth session this week.

Yields on the Municipal Market Data triple-A GO scale ended as much as four basis points higher. The 10-year yield rose one basis point to 2.00% while the 30-year yield increased three basis points to 3.14%. The two-year finished flat at 0.31% for the 18th consecutive session.

Yields on the Municipal Market Advisors 5% coupon triple-A benchmark scale climbed as much as five basis points. The 10-year yield jumped two basis points to 2.03% while the 30-year yield spiked four basis points to 3.22%. The two-year held at 0.33% for the 13th session.

Treasuries were stronger Friday afternoon. The benchmark 10-year yield dropped four basis points to 2.00% while the 30-year yield fell two basis points to 3.22%. The two-year yield fell one basis point to 0.26%.

Looking to next week, $9.51 billion is expected to be priced, up from this week's revised $6.08 billion. On the negotiated calendar, $7.77 billion should be priced, up from this week's revised $4.43 billion. On the competitive side, $1.74 billion is expected to be auctioned, up from this week's revised $1.65 billion.

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