The tax-exempt market showed strength on the short-end of the curve Thursday afternoon as bonds received better bids from buyers inside five years.

By afternoon, over $5 billion had been traded. The largest portion of the transactions, 41% or $2.11 billion, were dealers selling bonds to customers. Interdealer trades at $1.52 billion made up 30% of the transactions followed by $1.48 billion, or 29%, of dealers buying bonds from customers.

On trading desks Thursday afternoon, the focus stayed on bonds maturing within five years. Retail buyers extended further out in duration in the secondary because of institutional interest on the short-end of the curve, said Dan Toboja, vice president of Ziegler Capital Markets.

"The short-end is stable but remains well bid," he said. "The long has liquidity challenges. Institutions are not buying the long-end in the secondary."

In block size trading of Ohio's Buckeye Tobacco Settlement Financing Corp. 6.25s of 2037, bond prices fell, with $20 million, all in $5 million blocks, trading four basis points higher in yield as the day progressed.

On Wednesday, the triple-A Municipal Market Data scale ended steady to one basis point stronger. The 10-year and 30-year yields were steady at 2.51% and 4.11%, respectively. The two-year was steady for the seventh session at 0.34%.

Yields on the Municipal Market Advisors benchmark scale ended flat across the curve. The 10-year and 30-year yields were flat at 2.65% and 4.30%, respectively. The two-year was flat for the sixth session at 0.48%.

Treasuries were stronger, despite better economic data released Thursday morning. The benchmark 10-year yield slid three basis points to 2.61% and the 30-year yield fell four basis points to 3.73%. The two-year yield fell two basis points to 0.29%.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.