The tax-exempt market continued to weaken Tuesday afternoon as bid lists surfaced for longer-maturing bonds and buyers stayed focused on the short-end of the curve.

As sellers emerged in the secondary, market participants looked to the new issue market. "Bid lists were significant this morning," a New York trader said. "Bids are weaker but not many customers are hitting bids, especially on the long end." In the primary market, demand was strong within five years, this trader said.

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