The tax-exempt market continued to post gains Friday afternoon as traders said dealers were replenishing inventory and willing to pay up in price to get bonds back on their books.

“You can sell into the frenzy and make some money but right now it’s hard to justify selling,” a Chicago trader said. “The short-end of the market has been extremely strong. The longer-end has gotten the benefit of this but that could be a lot more vulnerable than the short-end.”

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