Yields in the municipal market increased slightly Wednesday during light to moderate secondary trading activity.

“There’s actually a little bit of weakness out there right now,” a trader in New York said. “There isn’t a ton of activity, so I’m not sure if they’ll cut the scale ultimately, but it feels off maybe a basis point or two.”

Tax-exempts opened September on Wednesday with an uptick in yields after doing so just once the entire month of August.

The Municipal Market Data triple-A scale yielded 2.19% in 10 years and 3.29% in 20 years Wednesday, following 2.18% and a record-low 3.28% Tuesday. The scale yielded 3.68% in 30 years Wednesday, following 3.67% Tuesday.

Despite the slight uptick in yields Wednesday, they have still dropped to all-time lows in 10-year munis 12 times in the past 18 sessions. Also, 30-year tax-exempts set record lows four times in the past nine sessions, while 20-year munis have established all-time lows five times over the same time period.

The record lows currently stand at 2.17% and 3.67% in 10- and 30-year tax-exempts, both established Aug. 25. The 20-year low of 3.28% was set Tuesday.

“I wouldn’t really take today as any sort of evidence that yields are going to start going up on a regular basis,” a trader in Los Angeles said. “We’re weaker by about a basis point overall, but in pretty light trading, with Labor Day and the long weekend just around the corner.”

Wednesday’s triple-A muni scale in 10 years was at 85.2% of comparable Treasuries and 30-year munis were at 100.8%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 112.5% of the comparable London Interbank Offered Rate.

The Treasury market showed losses Wednesday. The benchmark 10-year note finished at 2.58% after opening at 2.47%.

The 30-year bond was quoted near the end of the session at 3.65% after opening at 3.51%. The two-year note finished at 0.51% after opening at 0.47%.

In the new-issue market Wednesday, the Tennessee School Bond Authority competitively sold $226.9 million of debt to Morgan Keegan & Co., with a true interest cost of 3.33%. The bonds mature from 2011 through 2030, with term bonds in 2035 and 2040. None of the bonds were formally re-offered.

The credit is rated Aa1 by Moody’s Investors Service, AA by Standard & Poor’s, and AA-plus by Fitch Ratings.

Morgan Stanley priced $93.9 million of taxable Build America Bonds for Sunrise, Fla.

The BABs mature in 2030 and 2035, yielding 5.813% and 5.913% respectively, or 3.78% and 3.84% after the 35% federal subsidy, both priced at par.

The bonds are callable at par in 2020, and are subject to a make-whole redemption at Treasuries plus 35 basis points prior to 2020. The credit is rated AA-minus by Standard & Poor’s and AA by Fitch.

RBC Capital Markets priced $90.3 million of GO refunding bonds for the Douglas County, Colo., School District No. RE1.

The bonds mature from 2010 through 2025, with yields ranging from 0.30% with a 2% coupon in 2010 to 3.02% with a 4% coupon in 2025.

The bonds, which are callable at par in 2021, are rated Aa1 by Moody’s and AA-plus by Fitch.

Morgan Keegan priced $81.7 million of taxable GO bonds for Huntsville, Ala., in three series, including $62.5 million of taxable BABs.

The BABs mature from 2011 through 2027, with a term bond in 2030. Yields range from 1.055% in 2012, or 0.69% after the 35% federal subsidy, to 5.059% in 2030, or 3.29% after the subsidy, all priced at par. Bonds maturing in 2011 were not formally re-offered.

The bonds were priced to yield between 29.8 and 200 basis points over the comparable Treasury yields and are callable at par in 2020.

Bonds from the $11.7 million taxable series mature from 2011 through 2021 with a term bond in 2027. Yields range from 1.055% priced at par in 2012 to 4.35% priced at par in 2027.

The bonds were priced to yield between 29.8 and 120 basis points over the comparable Treasury yields and are callable at par in 2020.

The deal also contained a $7.5 million series of taxable recovery zone economic development bonds, which mature in 2032 and yield 5.209% priced at par. The bonds were priced to yield 155 basis points over the comparable Treasury yield and are callable at par in 2020.

The credit is rated triple-A by both Moody’s and Standard & Poor’s.

Also, the Commack Union Free School District in New York competitively sold $36 million of tax anticipation notes to JPMorgan, with an effective rate of 0.38%.

The Tans, which mature in June 2011 with a 1.5% coupon, were not formally re-offered.

In economic data released Wednesday, the Institute for Supply Management’s gauge of U.S. manufacturing exceeded economist expectations in August, rising to a reading of 56.3 from a previous 55.5. The gain offers a glimmer of hope amid recent economic data showing slower growth.

Economists expected a reading of 55.5. Readings above 50 signal expansion.

Michael Moran, chief economist at Daiwa Capital Markets, said the gain was led by production and employment.

“The increase was small, and the level of the index was not overly impressive, but the result was encouraging,” Moran said. “The reading went against the grain of other recent indicators.”

The August production index rose to 59.9 from 57 in July. The employment component surged to a 27-year high of 60.4 from a previous 58.6.

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