NEW YORK – Municipal bonds continue to weaken on looming supply as traders say that news hasn’t changed and will continue to tell the whole story in the tax-exempt market this week.

“We are seeing cuts today but activity is quiet,” a Los Angeles trader said. “The tone is negative and it just seems like we continue to drift down and there is not a lot of strength.”

He added that California traders are looking ahead to the almost $1 billion California State Public Works Board deal and “we will see how that’s received by the market.”

Munis continued to weaken Tuesday, according to the Municipal Market Data scale. Yields inside three years were steady while yields between the four- and seven-year jumped three to five basis points. The eight- to 10-year yields spiked two to four basis points while yields outside 11 years rose up to three basis points.

On Monday, the two-year yield finished steady at 0.36%. The 10-year and 30-year yields each rose two basis points to 2.28% and 3.46%, respectively.

Treasuries pared most of the gains made in the morning trading session. The two-year was steady at 0.40%. The benchmark 10-year yield fell two basis points to 2.36% while the 30-year yield dropped four basis points to 3.45%.

In the primary market, JPMorgan priced $430.8 million of Ohio general obligation bonds in three parts, rated Aa1 by Moody’s Investors Service and AA-plus by Standard & Poor’s and Fitch Ratings. Pricing details were not yet available.

Morgan Stanley priced $343.6 million of Wisconsin transportation revenue bonds, rated Aa2 by Moody’s and AA-plus by Standard & Poor’s and Fitch.

Yields ranged from 0.59% with 4% and 5% coupons in a split 2014 maturity to 3.52% with a 5% coupon in 2032. Credits maturing in 2013 were offered via sealed bid. The bonds are callable at par in 2022.

Morgan Stanley also priced $278.1 million of New York Metropolitan Transportation Authority dedicated tax fund bonds in two series.

Bonds on the first series, $116.3 million, yielded 0.69% with a 3% coupon in 2014, 0.92% with 4% and 5% coupons in a split 2015 maturity, and 1.17% with a 5% coupon in 2016.

Pricing details were not available for $161.8 million of bonds in the second series.

In the competitive market, New York City auctioned $470 million of GOs, a $100 million deal followed by a $370 million issue. The bonds are rated AA by Standard & Poor’s.

JPMorgan won the bid for $100 million. Prices were not available.

Wells Fargo won the bid for $370 million. Yields ranged from 0.55% with a 5% coupon in 2014 to 3.40% with a 5% coupon in 2029. The bonds are callable at par in 2022.

In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed weakening over the past few weeks.

A customer bought from a dealer Catholic Healthcare West California Health Facilities Financing Authority 5.25s of 2027 at 4.05%, 13 basis points higher than where they traded last Friday.

A customer sold to a dealer Puerto Rico Sales Tax Financing Corp. 4.75s of 2039 yielded 4.33%, eight basis points higher than where they traded earlier in the month.

A customer sold to a dealer Dormitory Authority of the State of New York 5s of 2023 at 3.05%, 51 basis points higher than where they traded in February.

A customer bought from a dealer Georgia 5s of 2018 at 0.80%, 25 basis points higher than where they traded a month prior.

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