The tax-exempt market ended the week on a steady note after an impressive rally that pulled yields down. Even after hitting record lows, traders said the fundamentals still look positive going into next week.

"Negotiated paper was eaten alive this week," a Chicago trader said. "It's getting to the point where there is such a fight for the negotiated. It's nine times oversubscribed so you're never getting the right allocation. You put in $10 million and you get $2 million. So it's a scramble to put money to work."

He added that by Friday, the tone was still firm, but much calmer. "It was a grind, but now there are not a lot of bonds out there so I'm seeing the same stuff that was there two weeks ago but just 20 basis points higher." There is no selling pressure and so not a lot of quality structures or interesting "yieldy" bonds, he said.

Looking ahead to next week, the trader said the technicals look positive. "I think we can firm next week. We are still cheap as an asset class and percentage-wise. There is a lot of money out there and not a lot of bonds."

Munis were steady Friday afternoon, according to the Municipal Market Data scale. On Thursday, the 10-year muni yield fell three basis points to 1.74%, hovering seven basis points above its record low of 1.67% set Jan. 18. The 30-year yield plummeted six basis points to 2.96%, beating the previous record low of 3.02% set Wednesday. The two-year was steady at 0.32% for the 29th consecutive session.

Treasuries were slightly weaker Friday. The benchmark 10-year yield rose one basis point to 1.50% while the 30-year yield rose two basis points to 2.59%. The two-year was steady at 0.27%.

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