With few muni-specific forces at work, tax-exempts followed the lead of Treasuries Tuesday afternoon.

Traders said that with little new issuance and June 1 redemption money approaching, the market should stay steady or firm. Yet, muni yields followed Treasury yields higher.

"The market definitely feels weaker," a Chicago trader said. "It's hard to tell exactly where we are going because there is a ton of roll-off on June 1, which you would think would keep things tighter than Treasuries. But munis are selling off."

This trader added that with a weaker Treasury auction, munis appeared to soften with their taxable counterparts. "The short end is holding tight inside five years. But the long end is weaker. Interest really falls outside 10 years."

In the primary market, new deals should start pricing Wednesday with $4.03 billion expected, down from last week's revised $7.19 billion. The negotiated market can expected $3.22 billion, down from last week's revised $5.77 billion. On the competitive calendar, $807.3 million should be auctioned, down from last week's revised $1.42 billion.

Friday, yields on the Municipal Market Data scale were steady. The 10-year and 30-year yields were unchanged at 1.90% and 3.08%, respectively. The two-year also finished flat at 0.29%.

Yields on the Municipal Market Advisors 5% scale showed yields steady to one basis point higher. The 10-year and 30-year yields were flat at 1.97% and 3.19%, respectively. The two-year was also unchanged at 0.35%.

Treasuries continued to soften Tuesday afternoon. The benchmark 10-year yield jumped 12 basis points to 2.13% and the 30-year yield spiked 10 basis points to 3.27%. The two-year yield increased two basis points to 0.28%.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.