With frustration over record low yields, the tax-exempt market weakened Wednesday morning as traders looked to take profits and sell inventory left on their books.

"The market is weaker by three to four basis points," a New York trader said. "Generally the street has a lot of inventory to bid so they are looking to move bonds at wider spreads. The market is looking to take profits and is just selling."

The trader added he was bidding on bonds and focusing on the secondary. "The market is still expensive," he said.

In the primary market, RBC Capital Markets is expected to price $315.8 million of New Mexico Finance Authority state transportation refunding revenue bonds, rated Aa1 by Moody's Investors Service and AAA by Standard & Poor's.

In the competitive market, the Port Authority of New York and New Jersey is expected to auction $595 million of revenue bonds in two series - $425 million and $170 million.

On Tuesday, the Municipal Market Data scale ended steady. The 10-year yield finished flat at 1.48%, one basis point above the 1.47% record low set Nov. 28. The 30-year yield ended unchanged at 2.48%, dangling above its record low of 2.47% set Nov. 28. The two-year finished flat at 0.30% for the 47th consecutive trading session.

Treasuries were stronger Wednesday morning. The benchmark 10-year yield dropped two basis points to 1.59% while the 30-year yield fell one basis point to 2.77%. The two-year was steady at 0.25%.

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