The tax-exempt market turned slightly weaker on the first day of trading in 2013 as a general risk-on trade ruled the markets.

After Congress passed the American Taxpayer Relief Act late Tuesday night, equity indexes soared Wednesday, putting selling pressure on bond markets.

The Dow Jones Industrial Average jumped 219 points, or 1.67%, to 13,323 points while the Standard & Poor's 500 Index spiked almost 24 points, or 1.68%, to 1,450. The Nasdaq rose 65 points, or 2.16%, to 3,084.

And while Treasuries and many bond prices fell, muni yields were not following directly in line.

"I can't say we are lockstep with Treasuries, but with the 30-year Treasury off, we are giving up a little ground," a Dallas trader said. "But there are not even enough trades in the secondary market to tell what direction the market should be going."

He added the Municipal Market Data scale is expected to set their forward roll for January maturities this afternoon, which is also providing some confusion on the value of bonds. "It will probably take two to three days for the market to settle and new issues to get priced before everyone is comfortable," the trader said. "So it's very slow today overall."

On Monday, the Municipal Market Data scale finished flat. The 10-year finished steady at 1.72%. The 30-year yield was steady at 2.83% for the sixth session while the two-year closed flat at 0.31% for the ninth consecutive session.

Treasuries were weaker Wednesday afternoon, though they pared some losses from the morning session. The benchmark 10-year yield jumped seven basis points to 1.83% while the 30-year yield soared eight basis points to 3.03%. The two-year yield rose one basis point to 0.27%.

 

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