The municipal bond market continued its trudge with a steady to slightly weaker tone for the third session this week as the debt ceiling and government shutdown kept buyers on the sidelines.

Bond markets also digested news that President Obama will nominate Janet Yellen to replace Ben Bernanke as the next chairman of the Federal Reserve Board. "Most of the reaction happened for Summers," a New York trader said, referring to Lawrence Summers, once considered the front runner, withdrawing his name from consideration last month. "Everyone assumed at that point it would be Yellen."

Back in municipals, the tone was steady to slightly weaker, this trader said, following Treasuries on an apathetic note until the government shutdown is resolved.

In the primary market, Bank of America Merrill Lynch priced for retail the largest deal of the week, $584.5 million of Wisconsin general obligation bonds, rated Aa2 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings.

Yields on the first series of $402.7 million of general obligation refunding bonds ranged from 0.70% with a 3% coupon in 2016 to 4.20% with a 4.125% coupon in 2033. The bonds are callable at par in 2023.

The second series of $181.8 million of GO refunding bonds were not offered for retail.

On Tuesday, yields on the triple-A Municipal Market Data scale ended as much as two basis points higher. The 30-year yield rose one basis point to 4.12%. The 10-year was flat for the fifth session at 2.54% and the two-year was steady for the sixth session at 0.37%.

Yields on the Municipal Market Advisors benchmark scale also ended as much as two basis points higher. The two-year and 10-year yields rose one basis point each to 0.55% and 2.71%, respectively. The 30-year yield increased two basis points to 4.28%.

The Treasury yield curve steepened with yields on the short-end falling and yields on the long-end rising. The two-year yield fell two basis points to 0.38%. The benchmark 10-year yield increased one basis point to 2.65% and the 30-year yield rose two basis points to 3.72%.

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