Demand in the new-issue market pushed municipal bond prices higher Tuesday for the 10th consecutive trading session as a triple-A rated Denver bond deal set the firmer tone in the competitive market and retail investors were lured in by New York City's general obligation debt.

"It's still well-bid generally," a New York trader said. "Credit spreads are generally tight. People want to be involved in the market."

He said the market felt one to two basis points firmer before the largest deals were auctioned in the competitive market. "Decent size competitive deals may set the tone and that could change pretty quickly."

Bank of America Merrill Lynch won the bid for $121.6 million of triple-A rated Denver GO and refunding bonds. Demand for high-grade paper allowed B of A Merrill to price the bonds with 5% coupons maturing between 2014 and 2022 as much as five basis points richer than Monday's triple-A Municipal Market Data scale.

Yields ranged from 0.16% with a 5% coupon in 2014 to 3.75% with a 4% coupon in 2030. The bonds are callable at par in 2023.

Other traders said investors reached for yield further down on the credit scale. "There is certainly some interest in deals today and secondary trading is firm," a second New York trader said. "I think deals this week will be very well received." The overall market traded about three basis points firmer, this trader said.

He added the $125 million Pennsylvania Economic Development Financing Authority UPMC revenue bond deal was bumped five basis points. "That's indicative of interest out there."

JPMorgan priced the UPMC bonds, rated Aa3 by Moody's Investors Service, A-plus by Standard & Poor's, and AA-minus by Fitch Ratings.

Yields ranged from 0.19% with a 1.25% coupon in 2014 to 5.07% with a 5% coupon in 2043. The bonds are callable at par in 2023.

A second retail order period for $500 million NYC GOs enticed smaller investors into the market. Siebert Brandford Shank & Co. priced the bonds, rated Aa2 by Moody's and AA by Standard & Poor's and Fitch. Institutional pricing is expected Wednesday. The city on Wednesday will auction a separate taxable competitive deal totaling $125 million.

On Tuesday, yields on the first series of $300 million ranged from 0.80% with a 3% coupon in 2016 to 4.24% with a 5% coupon in 2033 and are callable at par in 2023. Bonds maturing in 2015 were offered via sealed bid. Portions of bonds maturing between 2026 and 2030 were not offered for retail.

Yields were lowered one to two basis points from the first retail order period on bonds maturing between 2025 and 2033. Bonds with 5% coupons maturing between 2021 and 2033 were priced to yield 18 basis points to 22 basis points above Monday's double-A MMD scale.

Yields on the second series of $179 million ranged from 0.80% with a 4% and 5% coupon in a split 2016 maturity to 2.26% with a 4% and 5% coupon in a split 2020 maturity. Bonds with 5% coupons were priced to yield six basis points to 16 basis points above Monday's double-A MMD scale.

Yields on the third series of $20.2 million ranged from 0.60% with a 5% coupon in 2016 to 2.11% with a 5% coupon in 2020. In a sign of demand, most bonds on this series were priced richer than Monday's double-A MMD scale, to yield between four and 14 basis points through the scale on bonds maturing between 2016 and 2019. Bonds maturing in 2020 were priced to yield one basis point above the scale.

In the secondary market, trades compiled by data provider Markit showed strengthening.

Yields on California State Public Works Board 5s of 2037 and New Jersey Economic Development Authority 5.5s of 2027 fell four basis points each to 4.96% and 4.15%, respectively. Yields on Connecticut 5s of 2025 and Texas' Love Field Airport Modernization Corp. 5.25s of 2040 slid three basis points each to 3.20% and 5.40%, respectively.

On Tuesday, yields on the triple-A Municipal Market Data scale ended as much as five basis points lower. The 10-year yield fell three basis points to 2.56% and the 30-year yield dropped four basis points to 4.13%. The two-year was steady at 0.36% for the third session.

Treasuries ended stronger for the third consecutive trading session Tuesday. The benchmark 10-year yield slid five basis points to 2.66% and the 30-year yield fell six basis points to 3.67%. The two-year yield fell one basis point to 0.33%.

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