The tax-exempt market proved it could handle a pricey, high-grade $350 million New Jersey deal after snapping up a $1.2 billion Iowa fertilizer junk bond deal Tuesday.

The momentum that started the week continued into Wednesday as yields fell for bonds of all maturities. Traders said munis climbed higher throughout the day and trading was strong across the curve.

The focus on the competitive market persisted in the afternoon after a Federal Open Market Committee meeting announcement that indicated little change in policy.

The FOMC said it would continue its $85 billion a month purchases and keep the target range for the federal funds rate at zero to 0.25%. The committee said it currently anticipates that exceptionally low levels for the federal funds rate are likely to  be warranted as long as the unemployment rate remains above 6.5% and inflation is projected to be no more than 2.5%.

More notably, “The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes,” according to its statement.

“This is a status quo FOMC policy statement with few changes to the description of the economy and labor markets, only a slightly different wording describing fiscal policy headwinds, but no change to the language on inflation,” economists at RDQ Economics wrote. “The Fed made explicit in the statement that the size of the asset purchase program can be increased or reduced, but this is a point already made by a number of Fed officials in speeches. However, the statement loosely tied the pace of asset purchases to labor market and inflation data. Thus, this policy statement highlights the importance of upcoming economic data reports, with Friday’s employment report for April the next key release.”

In the municipal market, Bank of America Merrill Lynch priced $350 million New Jersey general obligation bonds, rated Aa3 by Moody’s Investors Service and AA-minus by Standard & Poor’s and Fitch Ratings.

Yields ranged from 0.199% with a 4% coupon in 2014 to 3.05% with a 4% coupon in 2033. The bonds are callable at par in 2023.

“No bid sides are being shown, but they paid up nicely for that deal,” a New Jersey trader said, referring to the GOs. “Those are pricey levels.” He added the bonds still hadn’t come out to the street yet.

“The market has a big rally and it’s up today a solid three to five basis points,” he said. “There is tons of trading and going away business. It’s a good solid market.”

Other traders agreed munis opened firm and continued that way throughout the day, with most of the activity coming outside 10 years. “It’s May 1 so a lot of coupon payments are coming in,” a New York trader said. Trading inside 10-years was mostly steady, he said.

Also in the competitive market, Wells Fargo won the bid for $212.5 million of Board of Trustees of the University of Illinois refunding revenue bonds, rated Aa2 by Moody’s and AA-minus by Standard & Poor’s.

Yields ranged from 0.32% with a 3% coupon in 2014 to 3.30% with a 4% coupon in 2032. The bonds are callable at par in 2023.

In the negotiated market, Raymond James priced $171.4 million of triple-A Mansfield Independent School District in Texas bonds guaranteed by the Permanent School Fund program. The underlying ratings are Aa2 by Moody’s, AA by Standard & Poor’s, and AA-plus by Fitch.

Yields on the first series, $63.3 million of unlimited tax refunding bonds, ranged from 0.25% with a 2% coupon in 2013 to 2.84% with a 4% coupon in 2030. The bonds are callable at par in 2023.

Yields on the second series, $86.2 million of unlimited tax refunding bonds, ranged from 0.20% with a 2% coupon in 2013 to 2.90% with a 4% coupon in 2031. The bonds are callable at par in 2023.

Yields on the third series, $21.9 million of taxable unlimited tax refunding bonds ranged from 0.33% with a 4% coupon in 2013 to 2.70% with a 4% coupon in 2025. The bonds are callable at par in 2023.

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

Yields on New York’s Triborough Bridge and Tunnel Authority 5s of 2030 fell four basis points to 2.75%. Yields on Massachusetts State Development Finance Agency 5s of 2029 and Maryland 5s of 2021 slipped three basis points each to 2.29% and 1.33%, respectively.

Yields on New Jersey’s Tobacco Settlement Financing Corp. 5s of 2041 and California 5s of 2042 fell two basis points each to 5.79% and 3.42%, respectively.

Yields on Ector County, Texas, Independent School District 3.125s of 2033 and University of Alabama 4s of 2034 dropped two basis points each to 3.30% and 3.61%, respectively.

Municipal bond scales ended stronger Wednesday after a stronger Tuesday and flat trading Monday.

Yields on the Municipal Market Data 5% triple-A GO scale ended as much as five basis points lower. The 10-year yield slid three basis points to 1.66% and the 30-year yield dropped five basis points to 2.79%. The two-year finished steady at 0.29% for the 19th session.

Yields on the Municipal Market Advisors 5% scale ended as much as four basis points lower. The 10-year dropped two basis points to 1.73% and the 30-year yield slipped three basis points to 2.95%. The two-year was flat at 0.32% for the 19th session.

Treasuries posted gains in the morning and held those throughout the day. The benchmark 10-year yield fell four basis points to 1.63% and the 30-year yield dropped five basis points to 2.83%. The two-year yield fell one basis point to 0.21%.

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