The tax-exempt market was stronger for the eighth consecutive trading session as traders said they are starting to get disenchanted with near record low yields once again.

"The market is up again and it's annoying," a New York trader said, adding that activity generally slows down when yields fall. "With lower rates, people just don't care."

He continued that as yields approach and trade around these lows, it's hard to make money. "It's a limited return."

On Wednesday, the 10-year Municipal Market Data yield finished steady at 1.75% for the second session while the 30-year yield closed flat at 2.90% for the third consecutive trading session. The two-year closed at 0.29% for the 25th consecutive session.

While the muni market cheapened during the first few weeks of August, the strength in the market over the past six trading sessions has recouped almost all of those losses. Over the past week, the 10-year yield has plummeted 15 basis points while the 30-year yield has plunged 12 basis points, pushing yields down to levels last seen August 7.

The 10-year MMD yield now trades 15 basis points above its record low of 1.60% set July 26 and the 30-year yield hovers 11 basis points above the 2.79% record low set July 25.

Treasuries were much stronger, erasing Wednesday's losses. The benchmark 10-year yield and the 30-year yield dropped four basis points each to 1.62% and 2.73%, respectively. The two-year yield fell one basis point to 0.27%.

In economic news, initial jobless claims remained flat at 374,000 for the week of Aug. 25, coming in higher than the 371,000 economists had predicted. Continuing claims fell 5,000 to 3.316 million for the week of Aug. 18.

"Thus far in August, initial jobless claims have averaged 370,000 — while this is modestly higher than the 366,000 average for July, initial claims in July were held down by the fact that there were fewer than normal summer retooling shutdowns in the auto sector," wrote economists at RDQ Economics. "The August data on initial jobless claims are similar to the average of December to March and this suggests a slowing in the pace of job losses from that seen during the second quarter."

In other economic news, personal income rose $42.3 billion, or 0.3%, in July following a downwardly revised 0.3% gain in June. The July increase was on par with a 0.3% gain economists had predicted.

Personal spending jumped $46 billion, or 0.4%, in July and matched gains economists had expected. The increase was the largest monthly jump since February's 0.8% increase.

"Real PCE started the third quarter on a fairly solid note suggesting that our 1.5% to 1.75% forecast for real spending in Q3 is too low — the downward revision to inventory investment in the second quarter with Wednesday's revised GDP data also points to higher than previously forecasted Q3 GDP," RDQ economists wrote. "There will be some commentators who will suggest the further moderation in inflation in July gives the Fed room for further policy easing. While next week's employment data for August will be important for determining the Fed's September policy decision, we note these sub-1.5% overall consumer inflation rates are likely to be fleeting."

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