Buyers in the tax-exempt market are receiving new issues extremely well as investors continue to put money to work. Meanwhile, secondary market activity is also picking up.

"The market is in good shape," a New Jersey trader said. "There is more trading in the secondary and everything seems strong. There are names circulating."

In the new issue market, retail order periods were received well and continue to price well Tuesday. "Institutional pricing for most of the deals are oversubscribed and are both bumped on large and small deals," the trader added. "So the market continues to grind.

Overall, the market has a different tone to it depending on if traders look at the primary or secondary. "It's a really bifurcated market," he noted. "It's bifurcated between new issues and the secondary and that's bifurcated between retail and institutions. So there is not much change if you're looking in the secondary, but if you're buying new issues the market looks strong."

In the primary market, Wells Fargo Securities priced for institutions $958.2 million of New York's MTA dedicated tax fund refunding bonds, rated AA by Standard & Poor's and AA-minus by Fitch Ratings. Prices were not yet available.

In the retail order period Monday, yields on the first series, $895.2 million of current interest bonds, ranged from 0.43% with a 4% coupon in 2014 to 3.07% with a 4% coupon and 2.87% with a 5% coupon in a split 2031 maturity. Bonds maturing in 2013 were offered via sealed bid. The bonds are callable at par in 2022.

Bonds in the second series, $63 million of capital appreciation bonds, had a yield to maturity of 3.62% in 2032.

Bank of America Merrill Lynch priced $246 million of Municipal Electric Authority of Georgia bonds, rated A1 by Moody's Investors Service and A-plus by Standard & Poor's and Fitch. Prices were not yet available.

B of A Merrill also priced for institutions $136.7 million of Mississippi general obligation bonds, rated Aa2 by Moody's, AA by Standard & Poor's, and AA-plus by Fitch.

Yields ranged from 1.22% with a 3% coupon in 2019 to 3.22% with a 3.125% coupon in 2032. The bonds are callable at par in 2022. Yields were unchanged from Monday's retail pricing.

On Monday, the two-year Municipal Market Data yield finished flat at 0.30% for the 14th consecutive trading session while the 10-year yield closed steady at 1.69% for the second session. The two-year yield fell two basis points to 2.82%.

The 10-year yield now trades nine basis points above its record low yield of 1.60% set July 26 while the 30-year yield hovers only three basis points above its 2.79% record low set July 25.

Treasuries were weaker Tuesday afternoon after a mostly steady session Monday. The benchmark 10-year yield jumped four basis points to 1.71% while the 30-year yield spiked up five basis points to 2.90%. The two-year yield rose one basis point to 0.27%.

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