Municipal bond trading desks, thinned by pre-holiday absences, made enough end-of-year moves Friday to strengthen yields at the long end of the curve.

Long-bond tax-exempt yields slipped down by as much as a basis point or two on the day, according to one market gauge and a trader in New Jersey.

"There was a little bit of end-of-the-year stuff, tax swaps, people setting up for the year end on the retail and institutional sides," he said. "The long bond rallied a little bit, maybe. Mostly it was people positioning themselves going into the holidays."

But munis underperformed Treasury yields, which rallied at the long end in response to a surprising jump in the final gross domestic product revision for the third quarter.

The 30-year Treasury plunged nine basis points in the session.

Treasury yields have also been moving since the Federal Reserve's Wednesday announcement that it will begin tapering its bond buying.

By midday, munis, hindered by fewer market participants at their desks and light activity, appeared listless by comparison, a trader in Illinois said.

"It doesn't feel like we're following Treasuries right now," he said. "The bid side is still there, but the demand in the open market just isn't. We haven't seen many offerings get lifted out there today. We're definitely lagging, if for nothing else, just because the volume is down so much. People are out."

The tax-exempt market expects issuance to be slight during the holiday week. Potential volume for next week should total about $15 million, down from total sales of $2.80 billion this week.

There are no competitive deals scheduled, after $765.4 million sold this week, based on figures by Ipreo, The Bond Buyer and Thomson Reuters. This past week, $1.84 billion arrived on the negotiated side of the ledger.

On the demand side, muni bond mutual funds recorded a 30th straight week of outflows from weekly reporting funds, according to Lipper FMI numbers. They reported outflows of $1.71 billion for the week of Dec. 18, against outflows of $1.90 billion one week earlier.

Industry watchers suggest that the past two weeks' outflow of $3.61 billion from muni bond funds, a large uptick from the previous few months' numbers, mostly stemmed from tax-loss selling on the part of investors.

Yields on the Municipal Market Data triple-A scale Friday remained unchanged across the curve throughout the day's session.

The triple-A, tax-exempt 10-year closed the day flat at 2.75%. The 30-year held at 4.18%. The two-year yield steadied at 0.33% for a 26th consecutive session.

Yields on the Municipal Market Advisors benchmark triple-A scale ticked down, mostly beyond 20 years on the curve. The 10-year remained unchanged at 2.77%. The 30-year slipped one basis point to 4.41%. The two-year held at 0.36%.

Treasury yields rose at the short end of the yield curve and fell for longer maturities Friday. The benchmark 10-year yield declined five basis points to 2.89%, while the 30-year yield plunged nine basis points to 3.82%.

The two-year has increased two basis points to 0.39%, and gained six basis points on the week.

In economic news, the Commerce Department reported 4.1% growth in U.S. GDP for the third quarter, a 0.5-point upward revision to the previous estimate.

The uptick, calculated in the GDP's third revision, dovetails with the reported improvement in payroll growth.

GDP rose at its fastest pace since the fourth quarter of 2011.

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