The bond markets eyed the Wednesday afternoon Federal Open Market Committee meeting announcement that said the Fed would continue its $85 billion a month purchases.
The FOMC also decided to keep the target range for the federal funds rate at zero to 0.25% and said it currently anticipates that exceptionally low levels for the federal funds rate will likely be warranted as long as the unemployment rate remains above 6.5% and inflation is projected to be no more than 2.5%.
However, "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.
Outside Fed news, the municipal bond market looked to the competitive market for the biggest deals.
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.
Outside the New Jersey deal, the market was strong across the curve. "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."
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.
Municipal bond scales ended as much as three basis points stronger Tuesday.
Yields on the Municipal Market Data 5% triple-A GO scale ended as much as three basis points lower. The 30-year yield slid three basis points to 2.84%. The 10-year closed unchanged for the third trading session at 1.69% and the two-year finished steady at 0.29% for the 18th session.
Yields on the Municipal Market Advisors 5% scale ended as much as two basis points lower. The 30-year yield dropped two basis points to 2.98%. The 10-year finished unchanged at 1.75% for the third session and the two-year was flat at 0.32% for the 18th session.
After the Fed announcement, Treasuries were unchanged from the morning session. Overall Treasuries were much stronger than Tuesday. The benchmark 10-year yield slid three basis points to 1.64% and the 30-year yield dropped five basis points to 2.83%. The two-year yield fell one basis point to 0.21%.