The tax-exempt market got off to a running start Tuesday morning as traders noted it hardly felt like a typically slow day coming off a three-day weekend.
"There is a little bit of activity," a New York trader said. "People are cutting bonds and hitting some bids."
The weakening Tuesday morning came after a slightly weaker Friday. Before that, munis had rallied for almost three consecutive weeks.
In the primary market this week, $8.26 billion is expected to come to market, up from last week's revised $7.53 billion. In the negotiated market, $6.80 billion is expected to be priced, up from last week's revised $6.19 billion. On the competitive calendar, $1.46 billion should be auctioned, up from last week's revised $1.34 billion.
The competitive calendar will take the lead Tuesday. California's Fontana Unified School District should auction $308.9 million of general obligation bonds in two pricings — a $87.93 million deal and $220.93 million deal.
Milwaukee should issue $120 million of short-term notes, rated MIG-1 by Moody's Investors Service and SP-1-plus by Standard & Poor's.
On Friday, the 10-year Municipal Market Data yield and the 30-year yield rose two basis points each to 1.69% and 2.86%, respectively. The two-year closed flat for the ninth session at 0.30%.
The 10-year yield now trades nine basis points above its record low of 1.60% set July 26. The 30-year yield is up seven basis points above is record low of 2.79% hit July 25.
Treasuries were slightly stronger Tuesday morning. The benchmark 10-year yield and the 30-year yield fell one basis point each to 1.72% and 2.95%, respectively. The two-year was steady at 0.26%.