The tax-exempt market continued to purge Friday afternoon as traders said bond yields jumped another 20 basis points after rising double digits Thursday.
Several traders also agreed the evaluation prices have not caught up to the market with reports of some bonds being 75 basis points to 90 basis points too high.
"No one wants to go long balance sheet risk into the weekend," a Florida trader said. "There is not only no bottom but everyone is conditioned to buy the dips and put your balance sheet out there and a lot of people are out of buying power."
This trader said he had been buying the selloff in closed-end funds Thursday and stopped Friday. "I said OK, that's it. I'm done."
"There is massive liquidation," this trader said. "It's an overreaction but that fear is driving why people aren't putting bids out."
Another trader agreed there was little buying. "There are no bids," a Chicago trader said. "Everyone has lists out. There is no liquidity and bonds have to get cheaper. Fast."
He added, bonds yields need to rise another 20 basis points at a minimum before a buyer would step into the market.
Thursday, yields on the Municipal Market Data scale ended as much as 20 basis points higher. The 10-year and 30-year yields spiked 20 basis points each to 2.48% and 3.78%, respectively. The two-year yield rose five basis points to 0.37%.
Yields on the Municipal Market Advisors 5% scale closed as much as 21 basis points higher. The 10-year jumped 21 basis points to 2.60% and the 30-year yield spiked 19 basis points to 3.88%. The two-year yield rose eight basis points to 0.47%.
Treasuries continued to weaken. The benchmark 10-year yield jumped 11 basis points to 2.51% and the 30-year yield increased seven basis points to 3.56%. The two-year yield rose four basis points to 0.37%.