Like a bad soufflé, the tax-exempt market collapsed Wednesday under the weight of new issuance and falling Treasury prices. The largest deal of the week was priced for institutions amid the market’s freefall.

Most traders agree that yields will go up — it’s just a matter of time. “This market is going to take a big hit,” a New York trader said. “I’m hitting down big bids. I think it’s a 10 to 15 basis point cut.”

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