The municipal market is so far holding its own Friday.
Tax-exempt yields have mostly danced in place, while Treasury yields have backtracked. Activity in the secondary has also picked up on the bid side as the day's trading session crossed into the afternoon.
The muni market is pretty much treading water, a trader in Chicago said.
"Bonds are getting done on the bid side of the market," he said. "There aren't many people taking things on the offer side. The bid side is coming in; it was a little wider yesterday. Now, it's a little tighter."
Primary market supply is expected to weigh in at $7.64 billion for the coming week. That falls roughly in line with the amount the market has been seeing lately, and is something industry watchers say should be easily absorbed.
A taxable deal for $1.5 billion for the Catholic Health Initiative takes the pole position on the calendar.
"Generally, October has more supply than buyers," the Chicago trader said. "But right now, it's still enjoying its good fortune."
The secondary market started the week with modest activity, traders added, but soon gave way to interest in the primary. By Thursday, wider bid-ask spreads slowed activity on all but specific high-quality block trades. By Friday afternoon, the spread had narrowed, the Chicago trader said.
Muni bond fund flows gave the market yet another strong signal for the week ended Oct. 17. Weekly reporting muni bond funds saw the 27th consecutive week of inflows, taking in $621 million.
Tax-exempt yields ended Thursday's session unchanged, according to the Municipal Market Data scale read. The benchmark triple-A 10-year yield closed flat at 1.74%.
The 30-year yield held steady at 2.86%. The two-year remained at 0.30% for the 17th consecutive trading session.
Treasuries yields crossed noon on Friday decidedly stronger, looking to end the otherwise weak week on a downward note. The benchmark 10-year yield has fallen seven basis points to 1.77%.
The 30-year yield has also plunged seven basis points to 2.95%. The two-year yield has slipped a basis point to 0.29%.
In economic news, the National Association of Realtors announced Friday that existing home sales fell 1.7% in September to a seasonally adjusted 4.75 million-unit rate. This followed a revised 4.83 million rate in August.
The NAR originally reported the August sales rate as a 4.82 million unit pace. Economists surveyed by Thomson Reuters anticipated September's 4.75 million rate.
The rate represents an 11% jump from that of September 2011. The sales rate has now landed north of previous-year levels for 15 consecutive months, according to NAR Chief Economist Lawrence Yun.