NEW YORK – The tax-exempt market looks to be on track to see a third consecutive day of gains on Thursday, after the three prior sessions resulted in losses.

“Deals are going very well,” a New York trader said. “There are a lot of bid-wanteds but nothing is trading. Dealers are trying to get ‘price discovery’ for their clients.”

Munis continued to firm Thursday after Wednesday’s big rally, according to the Municipal Market Data scale. Yields inside three years were steady, while yields on the four-year to 10-year fell as much as three basis points. The 11-year yields fell between two and four basis points. Outside 12-years, yields fell between one and five basis points.

On Wednesday, the two-year muni yield closed steady at 0.35% for its ninth consecutive trading session. The 10-year muni yield fell five basis points to 1.82% and the 30-year yield dropped six basis points to 3.60%.

Treasuries were firmer as well. The two-year yield fell two basis points to 0.22% while the benchmark 10-year yield fell four basis points to 1.95%. The 30-year yield was steady at 3.13%.

In the primary market, Bank of America Merrill Lynch is expected to price $334 million of Illinois Finance Authority bonds for the University of Chicago. This deal comes after the university priced $190 million of taxable fixed-rate bonds Tuesday. The bonds are rated Aa1 by Moody’s Investors Service, AA by Standard & Poor’s, and AA-plus by Fitch Ratings.

Merchant Capital is expected to issue $275 million of Gwinnett County, Ga., school district general obligation sales tax bonds, rated triple-A.

Ziegler is expected to issue $133 million of Martin County, Fla., Health Facilities Authority hospital revenue bonds, rated Baa1 by Moody’s and BBB by Standard & Poor’s.

In economic news, durable goods orders jumped $6.2 billion to $214.5 billion in December. The gain of 3% came after a 4.3% jump in November, the Commerce Department said.

The jump beat expectations as economists had predicted a 2% median increase.

“This is a solid durable goods orders report that corroborates the message of the rising ISM manufacturing new orders during the fourth quarter,” wrote economists at RDQ Economics. “For the fourth quarter as a whole, durable goods orders excluding transportation rose 13.3%, the strongest increase in a year and a half. The strength of this leading manufacturing indicator is a positive sign for the sector for early 2012.”

In other economic news, seasonally adjusted initial jobless claims rose 21,000 to 377,000 for the week ending Jan. 21, coming in higher than expected. Continuing claims rose 88,000 to 3.554 million for the week ending Jan. 14, the highest level since Dec. 31.

The four-week moving average for initial claims fell 2,500 to 377,500 while the four-week average of continuing claims fell 15,750 to 3.579 million.

“Through the usual turn-of-the-year volatility, the four-week average of claims has fallen in seven of the last eight weeks and the level of this average suggests that we could see another reading on private payrolls in the 200,000 area for January,” economists at RDQ Economics wrote. “The message of the downward trend in the four-week average of claims is further supported by the improvement in the employment subindex in all of the major regional manufacturing employment surveys released thus far for January.”

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