The tax-exempt market continued to post gains Friday afternoon after what traders described as a crazy, hectic week.
The municipal bond market has been on a strong rally since Wednesday morning, following Treasuries, in a risk-off trade.
"Munis are stronger," a New York trader said. "We are winding down a crazy week."
Over the course of the week, the secondary market saw increased activity once deals in the primary priced. "Thursday again saw plenty of action on the secondary," wrote Dan Toboja of Ziegler Capital Markets. "Yields on the cleanest munis came in across the curve and lower-rated bonds followed. The new issue balances from various dealers is largely cleaned up at this point after two days of solid market demand."
"Even with the looming fiscal cliff funds continuing to pour into munis, little stability in equities, an assumption of further Fed easing down the road, and manageable calendar there's no reason to think we'll get cheaper soon," he added.
On Thursday, the Municipal Market Data scale posted gains and set record low yields. The 10-year yield dropped four basis points to 1.59%, setting a record low as recorded by MMD. The 1.59% broke the previous record low of 1.60% set July 26.
The 30-year MMD yield fell five basis points to 2.69%, breaking the previous record low of 2.74% set Wednesday. Wednesday's record broke the previous low of 2.79% set July 25. The two-year finished steady at 0.30% for the 31st consecutive trading session.
Treasuries were steady to slightly weaker Friday afternoon. The benchmark 10-year yield and the 30-year yield increased one basis point each to 1.63% and 2.77%, respectively. The two-year was steady at 0.26%.
In next week's primary market, $7.61 billion is expected, up from this week's expected $4.65 billion. The negotiated market can expect $6.63 million, up from this week's revised $3.69 billion. On the competitive calendar, the market can expect $985 million, up from this week's revised $965 million.