NEW YORK – The tax-exempt market was quiet Friday morning as most traders closed up shop for the week. No new deals in the primary market and a calm secondary failed to provide direction for munis either way.

“It’s very nonchalant,” a Chicago trader said. “It’s just primary focused and everyone comes in on Monday, waits to see what deals are doing and see if they get allocated. If they don’t get the bonds they want, they put some money to work in the secondary for a few days then go home on Friday to sleep for the weekend.”

He added munis are choppy with these low rates, and it’s not going to change for the foreseeable future. “Until we get better rates, we are not seeing love out there. Everyone is frustrated with rates.”

The headline risk coming out of Europe is also adding to the illiquidity of munis. “No one is worried about getting their money back in munis,” he said. “They are focused on what they are losing in the stock market. So when things get crazy, no one pays attention to munis because they are also going to be there.”

Munis were steady Friday morning, according to the Municipal Market Data scale. On Thursday, the 10-year yield and the 30-year yield each dropped two basis points to 1.78% and 3.09%, respectively. The two-year yield remained steady at 0.31% for the 22nd consecutive trading session.

The Treasury yield curve steepened. The two-year yield fell one basis point to 0.31%. The benchmark 10-year yield rose two basis points to 1.73% while the 30-year yield jumped three basis points to 2.83%.

In the primary market next week, $9.19 billion is expected to come to market, up from this week’s revised $6.83 billion. In the negotiated market, $6.46 billion is expected to be priced, up from this week’s revised $5.13 billion. On the competitive calendar, $2.73 billion is expected, up from this week’s revised $1.70 billion.

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