The tax-exempt market ended a strong week on a very firm tone and demand has continued to outweigh supply and munis now trade within a few basis points of their record lows.

With near record low yields generally comes lower trading volume and traders expressed frustration over that Friday as munis have now traded steady to firmer for 10 consecutive trading sessions.

“Take a guess at what munis are doing,” a New York trader said. “They’re higher by a few basis points.”

Other traders agreed munis had firmed throughout the week, despite an uptick in issuance. “Munis keep on trucking,” a Chicago trader said. “Everyone freaked out after QE3, but the Fed told us rates are staying low and they aren’t going anywhere. So I think what we saw this week was people accepting that we are here for a long time and rates are staying low.”

He added demand has been very strong the past two weeks. “We saw over $8 billion and then $7 billion and everyone is gobbling up new issues. Usually with that supply you see concessions but deals were five to 10 times oversubscribed. You don’t even see supply it’s just gone.”

In the secondary market Friday, trades compiled by data provider Markit showed mostly strengthening. Yields on Ohio’s American Municipal Power Inc. 5s of 2025 and Nevada 5s of 2017 plunged four basis points each to 2.78% and 1.08%, respectively.

Yields on Dormitory Authority of the State of New York 4.375s of 2034 fell three basis points to 3.22% while Volusia County, Fla., Educational Facilities Authority 4.625s of 2028 dropped two basis points to 3.27%.

On Friday, the 10-year Municipal Market Data yield fell one basis point to 1.71% while the 30-year yield dropped three basis points to 2.85%. The two-year closed flat for the fourth session at 0.30%.

Since the most recent rally streak began Sept. 17, the 10-year MMD yield has plunged 23 basis points from 1.93% while the 30-year yield has plummeted 21 basis points from the 3.06% where it traded on Sept. 17.

The 10-year yield is now at its lowest since Aug. 2 when it touched 1.66%. It hovers only six basis points above its record low of 1.60% set July 26.

The 30-year yield is at its lowest since Aug. 2 when it yielded 2.84%, just five basis points above its 2.79% record low yield hit July 25.

The Treasury yield curve ended steeper Friday as yields on the short end fell while yields on the long end rose. The two-year yield fell two basis points to 0.23% while the 30-year yield increased one basis point to 2.83%. The benchmark 10-year was steady at 1.64%.

In next week’s primary market, $7.45 billion is expected to be priced, down slightly from this week’s revised $7.47 billion.

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