The municipal market closed weaker Friday, capping two days of weaker trading after the continuation of an April rally that began the week.
Traders said yields rose about two basis points in moderate trading.
"It's definitely weaker, and there seems to be a lot of people who would see if they thought they could get a good number for bonds," a trader in Chicago said. "I think we've just run too far, it's probably a healthy consolidation at this point. The street probably got a little ahead of itself."
The market jumped this week amid heavy issuance of Build America Bonds from some of the market's largest issuers. The yield on The Bond Buyer 20-bond index of 20-year general obligation bonds fell 21 basis points last week to 4.57%.
The market continued an April rally to begin the week before halting Thursday. That represented the first fall in The Bond Buyer's daily 40-bond index for the entire month.
"People aren't banging on the door to get out of product and people certainly aren't there to take it right now," a trader in New York said. "You've had a huge rally over the last couple of weeks. You take a breather, you take a look. Maybe you have to start making some corrections and go the other way."
Some of the Build America Bonds have surged since being issued. New Jersey Turnpike Authority BABs maturing in 2040, for instance, were sold to a customer at yields as low as 6.696% Friday after being priced at par at 7.414% earlier last week.
Traders said the issuance of the BABs helped sustain the rally in tax-exempts early last week.
"We had a pretty good run-up really driven by the BABs and the threat of less issuance at the long end," a trader in California said. "It left the market for dead Thursday. Buyers said, 'No mas, I'm out.' "
The Treasury market was also weaker Friday. The yield on the benchmark 10-year note, which opened at 2.91%, closed at 2.99%. The yield on the two-year note closed at 0.95% after opening at 0.92%. The yield on the 30-year bond, which opened at 3.79%, closed at 3.88%.
In the new-issue market, RBC Capital Markets released the final pricing wire on Pennsylvania's State Public School Building Authority $183 million of school revenue bonds for the Harrisburg School District project, some of which were taxable.
The bonds in the $133.8 million Series A mature 2020, 2021, and 2029, with two issues in 2033. Yields range from 4.21% with a 4% coupon in 2020 to 5.12% with a 4.75% coupon in 2033. The bonds are callable at par in 2019.
The issue also included a $22.9 million tax-exempt Series B, which mature 2017 through 2020, with two issues each in 2018 and 2019. Yields on the bonds, which are callable at par in 2014, ranged from 3.45% with a 5.25% coupon in 2017 to 4% with a 5.25% coupon in 2020.
The issue also included $26.6 million of bonds in a taxable Series C. The bonds from all series are insured by Assured Guaranty Corp. and have an underlying rating of A-plus from Standard & Poor's.
In economic data released Friday, durable goods orders fell 0.8% in March, reversing a positive jump seen in February. That beat IFR Markets poll of analysts' expectations of a 1.5% fall. Durable goods orders excluding transportation fell 0.6%.