The municipal market was weaker by about four basis points yesterday as participants digested news that Moody's Investors Service late Monday put its triple-A ratings of bond insurers Financial Security Assurance Inc. and Assured Guaranty Corp. on review for possible downgrade.

"It's just trying to sort out the FSA, Assured thing, and that's adding to a tough environment as it is," a trader in New Jersey said. "An environment of little liquidity, little interest, and this doesn't help. It's a little bit early, but the news about the insurers is still being digested. At first blush, it looks like the rating agencies are being a little more proactive than they've been over the past few years. I don't want to say it's overreaction, but they're maybe just being a little more aggressive."

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