The municipal bond market underperformed Treasuries Friday afternoon as bids were firm, but yields didn't fall as much as their taxable counterparts.

"Activity feels very slow," a Virginia trader said. "We put odds and ends out for bid and they are consistent and firm but as far as large trades go, we haven't been busy."

He added that while Treasuries are having a "solid day" munis are underperforming due to supply this week and healthy supply calendar next week.

Municipal bond scales ended as much as two basis points weaker Thursday after softer sessions Tuesday and Wednesday.

Yields on the Municipal Market Data triple-A GO scale were as much as two basis points higher. The 10-year and 30-year yields were flat at 1.74% and 2.97%, respectively. The two-year closed steady at 0.29% for the fifth session.

Yields on the Municipal Market Advisors 5% coupon triple-A benchmark scale also ended as much as two basis points higher. The 10-year yield increased one basis point to 1.81%. The 30-year yield was steady at 3.06% for the second session and the two-year was steady at 0.32% for the fifth session.

Treasuries continued to gain Friday afternoon. The benchmark 10-year yield plunged seven basis points to 1.73% and the 30-year yield plummeted eight basis points to 2.92%. The two-year was steady at 0.23%.

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