The tax-exempt market continued to firm for the third consecutive session as traders said munis were active across the yield spectrum.

"There is quite a bit of trading going on," a Chicago trader said. "It's firming up out there with hardly any supply."

He added there is active trading across the curve.

In the primary market, Jefferies & Co. is expected to price for retail $805 million Metropolitan Transportation Authority's Triborough Bridge and Tunnel Authority refunding bonds. Institutional pricing is expected Thursday. The bonds were expected to price this past December, but were postponed due to market conditions.

The sale will include $625 million of subordinate bonds, rated A1 by Moody's Investors Service, A-plus by Standard & Poor's and Fitch Ratings, and AA-minus by Kroll Bond Rating Agency.

The sale will also contain $180 million of senior bonds, rated Aa3 by Moody's, AA-minus by Standard & Poor's and Fitch, and AA by Kroll.

In the competitive market, triple-A rated Fairfax County, Va., is expected to auction $317.6 million of general obligation bonds.

On Tuesday, the Municipal Market Data scale finished several basis points stronger after finishing higher Monday. The 10-year MMD yield plunged five basis points to 1.73% while the 30-year yield dropped four basis points to 2.83%. The two-year closed flat at 0.36% for the fifth consecutive session.

Treasuries were slightly weaker Wednesday morning after two days of gains. The benchmark 10-year yield and the 30-year yield rose one basis point each to 1.88% and 3.08%, respectively. The two-year was steady at 0.26%.

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