The tax-exempt market saw a flurry of activity Tuesday morning as traders said the market was moving lower ahead of what is expected to be one of the bigger days for the primary market.

"It's weaker," a New York trader said. "There is a little bit of trading going on."

In the primary, JPMorgan is expected to price for institutions $522.9 million of New York State Thruway Authority personal income tax revenue bonds, following retail pricing Monday. The bonds are rated AAA by Standard & Poor's and AA by Fitch Ratings.

In the retail order period, yields ranged from 0.52% with 2% and 4% coupons in a split 2015 maturity to 3.03% with a 5% coupon in 2032. Bonds maturing in 2013, 2014, and between 2024 and 2031 were not offered for retail. The bonds are callable at par in 2021 except for credits maturing in 2022.

Citi is expected to price $366.9 million of Dallas waterworks and sewer system revenue refunding bonds, $106.9 million taxable and $260 million tax-exempt. The credit is rated AAA by Standard & Poor's.

In the competitive market, Texas will auction $9.8 billion of transportation and revenue anticipation notes, rated MIG-1 by Moody's, SP-1-plus by Standard & Poor's, and F1-plus by Fitch.

On Monday, the 10-year Municipal Market Data yield finished steady at 1.87% for the fourth consecutive trading session while the 30-year closed flat at 3.01% for the third sessions. The two-year closed at 0.29% for the 18th straight session.

Treasuries were weaker Tuesday after a steady session Monday. The benchmark 10-year yield jumped three basis points to 1.85% while the 30-year yield increased two basis points to 2.95%. The two-year yield rose one basis point to 0.30%.

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