The tax-exempt market showed signs of slowing, with traders noting the Labor Day holiday period was in full effect - at least in the retail market.

"It's like a library in here," a New Jersey trader said. "It's quiet - trading wise. And also quiet in the literal sense. Not a single person is on the phone in here."

Still, he added a small issue of Texas multi-family housing bonds were downgraded to BB from A-minus, which was helping keep the market active. "We are doing a little damage control today," he said referring to the downgrade.

While it's an extremely quiet week in the primary market, Bank of America Merrill Lynch priced for retail $196.8 million of Columbus, Ohio, taxable and tax-exempt general obligation, various-purpose and limited refunding bonds in four series. The bonds are rated triple-A by the major rating agencies. Pricing details were not available by press time.

On Friday, the 10-year Municipal Market Data yield and the 30-year yield dropped two basis points each to 1.79% and 2.93%, respectively. The two-year closed at 0.29% for the 22nd straight session.

The gains on Friday pushed muni yields back down to levels not seen since August 13 when the 10-year closed at 1.76% and the 30-year finished at 2.92%.

Treasuries continued to post gains Monday afternoon. The benchmark 10-year yield dropped four basis points to 1.65% while the 30-year yield fell three basis points to 2.76%. The two-year was steady at 0.28%.

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