The tax-exempt market appeared to be ready to snap its 24-session rally streak Friday morning as muni prices followed Treasuries lower. Yields jumped, following Treasury yields higher.

Still, traders said the market was showing signs of slowing. "Nothing is going on," a New York trader said. "It's a Friday in munis."

Munis were steady to weaker Friday morning, according to the Municipal Market Data scale. Yields inside five years were flat while yields outside six years rose one basis point.

On Thursday, the two-year yield dropped two basis points to 0.29%. The 10-year closed down one basis point to 1.60%, setting a record low as recorded by MMD. The previous record was 1.61% set Wednesday. The 30-year yield ended the day at 2.79%, remaining at its record low for the second session.

Until Friday, munis were steady to firmer for the past 24 consecutive trading sessions. Since the recent rally began on June 22, the 10-year has fallen 26 basis points while the 30-year yield has plunged 37 basis points.

Weakness in munis seemed to follow the lead from Treasuries. The benchmark 10-year yield soared eight basis points to 1.51% while the 30-year yield spiked up nine basis points to 2.58%. The two-year rose one basis point to 0.25%.

In economic news, real gross domestic product increased at an annual rate of 1.5% in the second quarter.

The increase was less than the 2.0% growth in the first quarter but slightly outperformed economists' expectations of 1.4%.

"Real GDP growth was weak in the second quarter but no weaker than expected, while growth over the four quarters ended in the first quarter of this year was revised a little higher to 2.4% from 2.0%," wrote economists at RDQ Economics. "The cumulative effect of the revisions to GDP was to raise the level of first-quarter GDP in both nominal and real terms by about 0.1% from what was previously reported."

The analysts added, "This report does little to advance the policy debate at next week's FOMC meeting since the revisions show a slightly stronger trajectory for growth over the last year but the latest data confirm a loss of growth momentum in the second quarter. Our view is that the Fed will want to see more data before committing to further easing and we do not expect a new round of asset purchases to be announced at next week's FOMC meeting."

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