Munis continued to soar Tuesday, following Treasuries, as fears out of Europe pushed investors to safe-haven assets. The 10-year muni saw the biggest rally, with its yield dropping to the lowest level in a month.

“It’s been a very busy day,” a trader in New Jersey said. “Our market is up and munis were bumped substantially — 10 basis points from 2022 on out. That’s fairly substantial.”

The trader added that there were plenty of big deals in the market and “all the deals did very well.”

On Tuesday, muni yields fell across the curve, sinking as much as 11 basis points, according to the Municipal Market Data scale. Yields on the short end of the curve fell up to four basis points, followed by a seven basis point drop in yields on five-year credits. In the belly of the curve, yields fell nine basis points. The 10-year yield tumbled the most, losing 11 basis points. Yields on the long end dropped 10 basis points.

The two-year closed at 0.42%, down two basis points from Monday, while the 30-year was down 10 basis points to 3.65%. The benchmark 10-year muni yield closed at 2.28%.

Treasuries continued their rally Tuesday, with yields having dipped eight to 46 basis points across the curve since last Thursday. Treasuries finished Tuesday’s session with the two-year down two basis points to 0.24%, and the 10- and 30-year yields each 17 basis points lower, closing at 1.96% and 2.97%, respectively.

“Obviously everything is driven by overseas,” a trader in New York said. “Our market is underperforming again pretty substantially.” The muni market will continue to underperform as the flight-to-quality trade continues, the trader said.

Uncertainty revolving around Greece forced investors to flock to safe-haven assets. The European Union  “rescue plans can unravel if a Greek referendum votes against the latest austerity measure,” wrote MMD analyst Randy Smolik. “The referendum is weeks away but the markets were making quick adjustments now. The risk-asset markets were in a state of panic.”

Indeed, all major indexes were down about 2.5%. The Dow Jones Industrial Average closed down 2.48%, or 297 points, to 11,658.

Issuance in the primary market Tuesday was heavy with several deals over $500 million pricing, including the much-anticipated $1.2 billion of Liberty revenue bonds issued by the New York Liberty Development Corp.

“There is healthy new issuance this week and that’s where customers will gravitate,” the New York trader said. “But you’re asking customers to chase lower yields and they are reluctant to do that, so we will see if there is some follow-through.”

With over $8 billion in new issuance this week, it’s hard for munis to keep up with stronger Treasuries, Smolik said.

“Competitive sales offered leadership, but not all sales offered the same indication of strength,” he said. “Customers could still buy negotiated product at attractive concessions.”

Goldman, Sachs & Co. priced the Liberty bonds issued to finance the 4 World Trade Center project. The bonds are rated A-plus by Standard & Poor’s and A by Fitch Ratings.

The bonds yielded 4.95% in 2031, 5.15% and 5.07% in a 2044 split maturity, and 5.10% in 2051. Coupons ranged from 5% to 5.75% and bonds were callable at par in 2021. A person familiar with the Liberty bond deal said, “Demand was strong — the interest rate was favorable.”

JPMorgan priced $701.2 million of Connecticut general obligation bonds in two series. The bonds are rated double-A by all three major rating agencies.

Yields on the first series, $550 million of GOs, ranged from 0.44% with a 2% coupon in 2013 to 3.71% with a 5% coupon in 2031. Credits maturing in 2012 were offered via sealed bid. The bonds are callable at par in 2021.

Yields on the second series, $151.2 million of Series 2011E refunding GOs, ranged from 0.44% with a 5% coupon in 2013 to 2.20% with a 5% coupon in 2019. Credits maturing in 2012 were offered via sealed bid.

RBC Capital Markets priced $498 million of lease revenue bonds for the California State Public Works Board. The bonds are rated A2 by Moody’s Investors Service and BBB-plus by Standard & Poor’s and Fitch.

Yields ranged from 1.82% with a 2% coupon in 2014 to 5.25% with a 5.125% coupon in 2031. The bonds are callable at par in 2021.

Loop Capital Markets priced $216.1 million of sales tax revenue bonds for Chicago. The bonds are rated Aa2 by Moody’s, AAA by Standard & Poor’s, and AA-minus by Fitch.

Bonds yielded 4.64% with a 4.375% coupon in 2035, 4.55% with a 5.25% coupon in 2038, and 4.71% with a 5% coupon in 2041. They are callable at par in 2022.

In the competitive market, Bank of America Merrill Lynch won $300 million of Maryland’s Washington Suburban Sanitation District consolidated public improvement bonds, which carry a AAA rating from Fitch.

Yields ranged from 0.34% with a 5% coupon in 2013 to 3.5% with a 4% coupon in 2028. Bonds maturing in 2012, 2015 to 2020, and 2029 to 2031 were sold but not available. The bonds are callable at par in 2021.

In the secondary market, trades reported by the Municipal Securities Rulemaking Board Monday showed gains. A dealer sold to a customer Massachusetts School Building Authority 5s of 2019 at 2.24%, nine basis points lower than where they traded Friday.

A dealer sold to a customer MSBA 5s of 2021 at 2.63%, six basis points lower from where they traded Thursday. Bonds from an interdealer trade of California 5.25s of 2024 yielded 3.89%, 28 basis points from where they traded Friday.

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