NEW YORK – The tax-exempt market continued to trade mostly steady from last week’s levels as traders said the holiday-shortened week could be preventing a big move in the muni market.

“There is not much of a direction right now. Everyone is staring at Friday knowing they are unlikely to even be at their desks,” a Chicago trader said.

He added there is not a lot of new issue supply that is providing direction this week. “There is also the possibility of outflows that could be coming from customers. People remember a year ago and the sell-off was driven by outflows. And now, we are seeing record inflows, but if we go into a situation where there is dramatic outflows, it will negatively impact the market,” he said.

He added the rally at the beginning of last week recouped all losses from the sell off two weeks ago. Week over week, yields inside 2025 were two to 10 basis points lower on March 30 compared to March 23, he said. Outside 14 years, yields were unchanged to one basis point lower. “So, on a total return basis, is the investor best rewarded in the tax-free muni bonds market? I think most participants would say no. There are better growth prospects elsewhere.”

Munis were weaker Monday early afternoon, according to the Municipal Market Data scale. Yields inside nine years were steady while the 10- to 13-year yields rose up to two basis points. Outside 14 years, yields were flat.

On Friday, the two-year yield finished steady at 0.36% for its tenth consecutive trading session. The 10-year yield and the 30-year yield each jumped two basis points to 2.11% and 3.39%.

Treasuries continued to strengthen. The two-year yields fell one basis point to 0.33% while the 30-year yield dropped four basis points to 3.32%. The benchmark 10-year yield plummeted five basis points to 2.17%.

In the primary market, Bank of America Merrill Lynch priced for retail $1.1 billion of New Jersey Economic Development Authority cigarette tax revenue refunding bonds, rated Baa1 by Moody’s Investors Service and BBB-plus by Standard & Poor’s and Fitch Ratings. Institutional pricing is expected Tuesday. Pricing details were not yet available.

In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed firming over the past few days.

A dealer sold to a customer Mississippi 5s of 2036 at 3.42%, 11 basis points lower than where they traded a few days prior.

A dealer bought from a customer Los Angeles Community College District 6.75s of 2049 at 4.85%, 10 basis points lower than where they traded the week prior.

A dealer sold to a customer Illinois 5.1s of 2033 at 5.46%, eight basis points lower than where they traded last Friday.

Another dealer sold to a customer Utah Associated Municipal Power Systems 5s of 2024 at 3.39%, four basis points lower than where they traded last week.

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