Municipal bonds gained through Tuesday afternoon as traders in the tax-exempt market received the first of a wave of new deals expected in the next month.

"We're basically seeing a firm tone in the marketplace today," a New York-based trader said in an interview. "If we do absorb the bond volume this week and prices remain full, you have a good opportunity for the muni market to continue this way."

The Bond Buyer's most recent 30-day visible supply showed $12.4 billion on the way, including $8.253 billion in potential volume this week. That's almost twice as much as the $4.388 billion introduced in the week ended October 18.

Citigroup Global Markets Inc. priced $450 million of California state general obligation various purpose bonds Tuesday morning. The mandatory put bonds were offered with a 4% coupon maturing in 2026 and a 0.92% yield, and a 4% coupon in 2027 with a 1.33% yield. The bonds are callable at par in 2016 and 2017, respectively.

JPMorgan held a second day of retail pricing for $1.61 billion of California general obligation bonds Tuesday, rated A1 by Moody's Investors Service and A by Standard & Poor's and Fitch Ratings.

Yields on institutional pricing for $698 million of the GOs ranged from 1.50% on 5% coupon bonds maturing in 2018, up two basis points from Monday, to 4.95% on 5% coupon bonds maturing in 2043. Bonds maturing in 2014 were offered in a sealed bid. They are callable at par in 2023.

On $659 billion of various purpose GOs, yields ranged from 1.93% with a 5% coupon maturing in 2019, up two basis points from Monday's pricing, to 4.44% with 5% coupons maturing in 2031. The bonds are callable at par in 2023.

"It appears that there are some good signs in the market," the New York-based trader said. "We're starting to see retail comeback in and that's the first sign of heading in a good direction."

In economic news, Private payrolls grew 126,000 in September, lower than economist expectations of a jump of 182,000, and the unemployment rate fell to 7.2% from 7.3%, the Bureau of Labor Statistics reported Tuesday. The unemployment dip was largely a result of fewer available workers.

Treasury yields fell across the curve, with the benchmark 10-year and 30-year yields dropping seven and eight basis points, respectively, to 2.53% and 3.61%. The 2-year yield slid two basis points to 0.30%, according to data from Reuters.

Yields on the triple-A Municipal Market Data scale fell as much as four basis points for bonds maturing between 2018 and 2043, and by three basis points for those maturing in 2017. Yields on bonds maturing in 2016 fell as much as two basis points.

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