The tax-exempt market extended its five-day firming streak as traders said demand for municipal bonds continues to outweigh supply and most likely will continue that theme through the end of the year.

While the election on Tuesday provided some clarity, there is still a lot of uncertainty left in the markets about the fiscal cliff and the tax code, providing further momentum for the risk-off trade.

“Munis are stronger,” a New York trader said. “We are winding down a crazy week.”

A strong buying spree earlier in the week continued into Friday. “Munis continue to rally along with Treasuries,” a Boston trader said. “There is simply too much money chasing too few bonds. We continue to see capitulation from individuals and institutions who are sitting with cash. There is still uncertainty with respect to tax reform but munis are the only game in town.”

Over the course of the week, the secondary market saw increased activity once deals in the primary priced. “Thursday again saw plenty of action on the secondary,” wrote Dan Toboja of Ziegler Capital Markets. “Yields on the cleanest munis came in across the curve and lower-rated bonds followed. The new issue balances from various dealers is largely cleaned up at this point after two days of solid market demand.”

“Even with the looming fiscal cliff funds continuing to pour into munis, little stability in equities, an assumption of further Fed easing down the road, and manageable calendar there's no reason to think we'll get cheaper soon,” he added.

On Friday, the Municipal Market Data scale posted gains for the fifth consecutive session and new record low yields were set. The 10-year yield dropped two basis points to 1.57%, setting a new low as recorded by MMD. The 1.57% record beat the previous record of 1.59% set Thursday. Before that, the record low was 1.60% set July 26.

The 30-year MMD yield fell three basis points to 2.66%, also setting a new record low as recorded by MMD. The 2.66% record beat the previous record of 2.69% set Thursday and the 2.74% record set Wednesday. Before this week, the record was a 2.79% set July 25.

The two-year finished steady at 0.30% for the 32nd consecutive trading session.

Treasuries ended flat on Friday. The benchmark 10-year yield and the 30-year yield ended steady at 1.62% and 2.76%, respectively. The two-year was steady at 0.26%.

In next week’s primary market, $7.61 billion is expected, up from this week’s expected $4.65 billion. The negotiated market can expect $6.63 billion, up from this week’s revised $3.69 billion. On the competitive calendar, the market can expect $985 million, up from this week’s revised $965 million

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