NEW YORK – The tax-exempt market continued to weaken for its fifth consecutive trading session as market participants looked to this week’s new supply for direction.

“The market is still kind of weak,” a New York trader said. “There is a little bit of a bid side, but there is so much supply coming.”

The Municipal Market Data scale was not updated by press time. But on Friday, the two-year yield closed two basis points higher at 0.36% while the 10-year yield jumped five basis points to finish at 2.26%. The 30-year yield increased four basis points to 3.44%.

Since munis started weakening last Tuesday, yields have risen dramatically. The two-year yield jumped nine basis points while the 30-year yield increased 15 basis points. The 10-year yield got hit the hardest, rising 24 basis points in four days.

Before the big losses this week, the two-year yield had not been this high since Jan. 11. The 30-year yield hasn’t risen to this level since Jan. 9. The 10-year muni hadn’t seen these levels since Nov. 18, 2011.

Last week, muni-to-Treasury ratios fell as munis outperformed Treasuries and became relatively more expensive. Since munis started weakening on Tuesday, the five-year ratio fell to 84.7% from 86.8% at the start of the week. The 10-year ratio fell to 98.7% on Friday from 99.5%. The 30-year ratio fell to 101.2% from 103.8%.

Looking to this week, the municipal market can expect $7.95 billion in new bonds, up from a revised $5.52 billion this week. On the negotiated calendar, $6.51 billion is expected, up from this week’s revised $4.47 billion. In competitive deals, $1.44 billion is expected, up slightly from this week’s revised $1.04 billion.

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