The municipal market eased its way into the week on Monday with little activity, as traders look to assess the impact that Detroit's historical bankruptcy may have on the market.

"The Detroit news is settling in for the first time with retail investors," said one trader in New York. "People were out on a very hot Friday, pushing it aside, and this will be the first week seeing how the Detroit news spills into the market. So far it's not a huge impact, but the retail investor does get scared."

Retail investors spooked by Detroit's bankruptcy may hesitate to buy into the few deals available early this week, even though the city's problems were well-documented long before the filing last week, the trader said.

"That's the question, whether or not Detroit initially provides a weakness for our market," a trader in North Carolina said. "Everybody's trying to see where the bondholder's going to fall."

He added that continual outflows from mutual funds are putting more pressure on the market. There was a fair amount of bid-wanteds, providing some selling pressure, he added.

Yields were trading a couple basis points cheaper from last week as the market softened this morning, traders said. One trader predicted continued softening into the week in relation to Detroit's bankruptcy filing. A thin primary market could counter that news though, he said, as traders fight over new issuance.

This week's calendar is scheduled to be lighter than the previous week, according to estimates from Ipreo LLC and The Bond Buyer. Potential volume for this week is expected to total $5.54 billion, down from total sales of $8.32 billion last week.

Negotiated sales this week are expected to total $4.30 billion, compared with a revised $6.33 billion last week. Bonds scheduled for competitive sale this week will reach $1.24 billion, down from $1.99 billion sold last week.

In other economic news, existing home sales slowed to 5.08 million a year in June, 1.2 % lower than the 5.14 million pace the previous month, the National Association of Realtors announced Monday. The rate was weaker than the median 5.25 million rate estimate of economists polled by Thomson Reuters.

Treasury yields started Monday firmer at the back of the curve, with the benchmark 10-year yield falling four basis points to 2.48% from 2.52%. The 30-year fell five basis points to 3.55% from 3.60%, while the two-year yield remained at 0.31%.

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