The municipal rally that pulled the 10-year and 30-year yields down 15 and 25 basis points in six days is officially over. Or perhaps it has only paused.

Yields rose across the curve Thursday, erasing gains made since last Friday.

Most tax-exempt traders knew the rally had halted by Thursday morning.

“There is a very different tone in the market Thursday,” a trader in New York said. “Several customers are putting out large bid-wanted lists and dealers are starting to look for bids for inventory, which could be a sign that the market is starting to feel like the music is slowing down.”

“It’s still early and could reverse,” he said, “but the market has opened with a dramatically different feeling than when we left last night.”

Another New York trader noted activity had slowed by afternoon. “Munis are very weak and we are seeing 10 basis point cuts,” he said, referring to prices.

Munis fell across the board Thursday, according to the Municipal Market Data scale. Yields inside four years were unchanged. Five-year to 11-year yields rose between three and seven basis points. The 12-year to 21-year yields jumped up four basis points while yields outside the 22-year spiked up between five and 10 basis points.

The weakening comes after the 10-year and 30-year muni yields broke record lows for the sixth consecutive trading session Wednesday. Since that streak began on Jan. 10, 10-year and 30-year yields fell 15 and 25 basis points, respectively.

On Thursday, the 10-year yield finished up seven basis points to 1.74%. The 30-year yield jumped 10 basis points to 3.25%. The two-year held at 0.35% for its fourth consecutive trading session.

Treasuries took a hit Thursday, erasing all gains made since Jan. 10 as positive economic news pushed investors to riskier assets. Initial jobless claims fell 50,000 to 352,000 for the week ending Jan. 14 from the previous week’s 402,000. The Federal Reserve Bank of Philadelphia index came in at 7.3 in January, up from 6.8 in December, showing the region’s manufacturing sector expanded faster in January than the previous month.

The two-year Treasury yield rose two basis points to 0.25%, and the benchmark 10-year year yield jumped eight basis points to 1.98%. The 30-year yield spiked nine basis points to 3.04%.

In the primary market, Morgan Stanley priced $251 million of North Carolina Public Service Authority revenue bonds in three series. The credit is rated Aa3 by Moody’s Investors Service and AA-minus by Standard & Poor’s and Fitch Ratings.

Yields on the first series, $99.5 million of refunding bonds, ranged from 0.78% with 3% and 5% coupons in 2014 to 3.09% with a 5% coupon in 2030. Debt maturing in 2012 was not formally reoffered. The bonds are callable at par in 2021.

Yields on the second series, $32.3 million of refunding bonds, ranged from 0.67% with a 5% coupon in 2013 to 2.09% with a 5% coupon in 2020.

Yields on the third series, $119.2 million of refunding bonds, ranged from 1.22% with a 5% coupon in 2013 to 2.44% with a 5% coupon in 2020.

Morgan Stanley also priced $201.34 million of Fairfax County, Va., public improvement refunding bonds, rated triple-A by the rating agencies. Yields ranged from 0.35% with a 3% coupon in 2014 to 1.94% with a 5% coupon in 2024.

This deal comes after Citi won the competitive bid for $218 million of Fairfax County public improvement bonds Wednesday.

In the competitive market, the University System of Maryland auctioned $70 million of revenue bonds in two pricings. The credit is rated AA-plus by Standard & Poor’s.

Morgan Stanley won the bid for the first pricing of $46.95 million. Maturities ranged from 2013 to 2023 with 2% to 4% coupons. The bonds were not formally reoffered.

Robert W. Baird won the bid for the $24.05 million deal. Pricing information was not available by press time.

Deals priced Thursday came a day after many deals were priced extremely well. Alaska scheduled a retail order period for $174.6 million of general obligation refunding bonds, but because of high demand, the institutional order period was accelerated.

An Alaska official said the deal was oversubscribed by retail except for portions of the 2016 and 2019 maturities, and priced were bumped between two and five basis points throughout the curve.

In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed weakening Thursday.

A dealer sold to a customer Illinois 4.25s of 2035 at 4.32%, seven basis points higher than where they traded the day before. Bonds from an interdealer trade of California economic recovery 5s of 2022 yielded 1.31%, nine basis points higher than where they traded the day before. A dealer bought from a customer New York Liberty Development Corp. 5s of 2044 at 4.31%, seven basis points higher than where they traded Wednesday.

Until Thursday, the rally in munis pushed ratios down as munis outperformed Treasuries.

The five-year muni-to-Treasury ratio fell to 96.2% on Wednesday from 98.9% on the first day of trading in 2012. The 10-year ratio fell to 88.4% from 96.4% and the 30-year ratio fell to 106.8% from 119.4% on the first day of trading this year.

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