Municipal bonds "traded by appointment" Tuesday afternoon as market participants said business can get done on a selective basis.

Traders said the government shutdown and debt ceiling was more of an excuse not to trade, and the real problems were the lack of new issue supply in the market and continued outflows from municipal bond funds.

"It's stable but a trade by appointment day," a Chicago trader said. "It's a new quarter, we've got no supply, and some outflows. There are just a lot of cross currents and anytime there is uncertainty in the environment, there is not a lot of money generation."

This trader said money is being put to work across the yield curve selectively. "Supply should stay subdued for a couple more weeks. You need to get secondary traders that are tired of these blocks and they'll go cheaper to shake it out."

In the primary market, JPMorgan held preliminary pricing for $434.2 million of Broward County, Fla., airport system revenue bonds, rated A1 by Moody's Investors Service, A-plus by Standard & Poor's, and A by Fitch Ratings.

Yields on the first series, $164.5 million subject to the alternative minimum tax, ranged from 0.82% with a 3% coupon in 2015 to 5.41% with a 5.25% coupon in 2043. Bonds maturing in 2014 were offered via sealed bid. The bonds are callable at par in 2023.

Yields on the second series of $55.4 million of non-AMT ranged from 0.59% with a 3% coupon in 2015 to 5.06% with a 5% coupon in 2043. Bonds maturing in 2014 were offered via sealed bid. The bonds are callable at par in 2023.

Yields on the third series of $214.3 million of non-AMT, ranged from 0.59% with a 3% coupon in 2015 to 5.01% with a 5.25% coupon in 2043. Bonds maturing in 2014 were offered via sealed bid. The bonds are callable at par in 2023.

Morgan Stanley priced for retail $405.9 million of Oregon Department of Transportation highway user tax revenue senior lien bonds, rated Aa1 by Moody's, AAA by Standard & Poor's, and AA-plus by Fitch.

Yields ranged from 0.15% with a 2% coupon in 2014 to 4.29% with a 4.25% coupon and 3.99% with a 5% coupon in a split 2034 maturity. Bonds maturing in 2038 were not offered for retail. The bonds are callable at par in 2023.

Jefferies & Co. held preliminary pricing for $250 million of City Colleges of Chicago community college district unlimited tax general obligation bonds, rated AA by Standard & Poor's and AA-minus by Fitch.

Yields ranged from 0.70% with a 4% coupon in 2015 to 5.39% with a 5.25% coupon in 2043. The bonds are callable at par in 2023.

On Monday, yields on the triple-A Municipal Market Data scale were unchanged for the second session. The 10-year and 30-year yields were flat for the fourth session at 2.54% and 4.11%, respectively. The two-year was steady for the fifth session at 0.37%.

Yields on the Municipal Market Advisors benchmark scale were also unchanged. The 10-year yield closed unchanged at 2.70% for the second session and the 30-year was flat at 4.26% for the fourth session. The two-year closed unchanged at 0.54% for the 13th session.

The Treasury yield curve continued to flatten Tuesday afternoon. The two-year yield rose four basis points to 0.39%. The benchmark 10-year yield fell one basis point to 2.63% and the 30-year yield dropped two basis points to 3.69%.

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