The municipal bond market continued to strengthen for the fourth session this week as demand outweighed supply and weaker stocks buoyed fixed-income markets.

The tax-exempt market got a taste of what heavy July reinvestment money feels like as deals were scooped up and prices bumped across the curve.

“It’s very strong,” a New York trader said. “There has been a lot of New York issuance and some Massachusetts Port Authority bonds and everything that’s been priced has been bumped. Some were bumped as high as 19 basis points and it’s just big reinvestment time and not a lot of supply.”

He added that supply in the first week of July was very low due to the Fourth of July holiday and so there is pent up demand. “There are people putting money to work and stocks being in trouble is helping us also,” he said.

Another New York trader agreed, declaring: “Munis are on fire.”

Munis strengthened Thursday, according to the Municipal Market Data scale. Yields inside four years were steady while the five- to 12-year yields dropped between two and four basis points. Outside 13 years, yields plunged between five and seven basis points.

The 10-year muni yield fell three basis points to 1.74%, hovering seven basis points above its record low of 1.67% set Jan. 18. The 30-year yield plummeted six basis points to 2.96%, beating the previous record low of 3.02% set Wednesday. The two-year was steady at 0.32% for the 29th consecutive session.

Treasuries were stronger Thursday. The benchmark 10-year yield dropped three basis points to 1.49% while the 30-year yield fell four basis points to 2.57%. The two-year yield fell one basis point to 0.27%.

Due to increased demand in the market this week, Jefferies & Co. moved up the order period for $500 million of New York’s Metropolitan Transportation Authority revenue bonds.

The deal was originally scheduled to be priced for retail Friday with an institutional order period on Monday. The credit is rated A2 by Moody’s Investors Service and A by Standard & Poor’s and Fitch Ratings.

Yields ranged from 0.68% with a 4% coupon in 2014 to 3.60% and 3.75% with 5% coupons in a split 2042 maturity. Credits maturing in 2012 and 2013 were offered via sealed bid. The bonds are callable at par in 2022.

JPMorgan priced $438.4 million of Tennessee State School Bond Authority higher education facilities second program bonds in three series. The credit is rated Aa1 by Moody’s, AA by S&P and AA-plus by Fitch.

Yields on the first series, $209.4 million, ranged from 0.54% with a 5% coupon in 2015 to 3.62% with a 4% coupon in 2042. Credits maturing in 2013 and 2014 were offered via sealed bid. The bonds are callable at par in 2022.

Yields on the second series, $125.2 million, ranged from 0.54% with a 5% coupon in 2015 to 3.63% with a 3.5% coupon in 2034. Credits maturing in 2013 and 2014 were offered via sealed bid. The bonds are callable at par in 2022.

Bonds in the third series, $103.8 million of taxable bonds, were priced at par with coupons ranging from 0.90% in 2015 to 3.845% in 2042. Credits maturing in 2013 and 2014 were offered via sealed bid. The bonds were priced 55 to 200 basis points above the comparable Treasury yields.

RBC Capital Markets priced $211.3 million of Oakland’s taxable pension obligation bonds, rated Aa3 by Moody’s and A-plus by Standard & Poor’s. Prices were not yet available.

Piper Jaffray & Co. priced $126.2 million of Irvine, Calif., limited obligation improvement bonds, rated BBB-plus by Standard & Poor’s.

Yields ranged from 0.65% with a 2% coupon in 2013 to 3.98% with a 4% coupon in 2029. The bonds are callable at par in 2022.

In the competitive market, Wells Fargo Securities won the bid for $290 million of Miami-Dade County School District tax anticipation notes, rated MIG-1 by Moody’s. The notes yielded 0.14% with a 2.5% coupon.

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

Yields on California’s Golden State Tobacco Securitization Corp. 5s of 2045 plunged 10 basis points to 3.95%.

Yields on Pennsylvania Turnpike Commission 5s of 2042 and Northside, Texas, Independent School District 3.5s of 2037 each dropped four basis points to 3.53% and 3.60%.

Yields on Connecticut 5s of 2026 and Anderson County, Texas 2s of 2021 each fell three basis points to 2.50% and 1.79%.

Yields on New York City Municipal Water Finance Authority 5s of 2039 and Dormitory Authority of the State of New York 5s of 2026 fell one basis point each to 3.00% and 2.63%.

Because municipal yields have fallen more than Treasury yields this week, the muni-to-Treasury ratio fell as munis outperformed and became relatively more expensive.

The five-year ratio fell to 114.3% on Thursday from 121.9% last Friday. The 10-year ratio dropped to 116.8% from 117.4% at the end of last week. The 30-year ratio fell to 115.2% on Thursday from 117.3% last week.

The slope of the yield curve continues to flatten as investors move out further on the curve in search for yield.

The one- to 30-year slope of the curve flattened to 276 basis points on Thursday from 292 basis points last Friday. The one- to 10-year slope of the curve flattened to 154 basis points from 162 basis points at the end of last week.

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