NEW YORK – The tax-exempt market continued to strengthen Thursday morning as concerns about Spain spread, bringing buyers into the Treasury market and pushed munis higher.

The primary market has been active and new deals received well this week. Secondary trading activity has been mixed.

A falling-rate environment is a much harder market to trade in, a New York trader said. “When rates are lower, it’s less busy.”

Munis were stronger again Thursday morning, according to the Municipal Market Data scale. Yields inside four years were steady while the yields on five years fell as much as two basis points. Outside six years, yields dropped between one and four basis points.

On Wednesday, the two-year yield fell two basis points to 0.31% after holding steady at 0.33% for seven consecutive trading sessions. The 10-year yield fell three basis points to 1.92% while the 30-year yield dropped one basis point to 3.30%.

Treasuries were stronger. The benchmark 10-year yield and the 30-year yield each fell one basis point to 1.97% and 3.12%. The two-year was steady at 0.27%.

In the primary market, JPMorgan is expected to price $227.6 million of Sacramento Municipal Utility District electric revenue refunding bonds, rated A1 by Moody’s Investors Service and A-plus by Standard & Poor’s and Fitch Ratings.

Barclays Capital is expected to price $177.7 million of Sonoma-Marin Area Rail Transit District measure Q sales tax revenue bonds, rated AA by Standard & Poor’s and A by Fitch.

In economic news, seasonally adjusted initial jobless claims fell 2,000 to 386,000 for the week ending April 14, down from an upwardly revised level of 388,000 the week prior.

Continuing claims rose to 26,000 to 3.297 million for the week ending April 7.

Initial claims were above the 370,000 level economists had predicted while the continuing claims were higher than the expected 3.290 million.

“The more elevated readings on initial jobless claims in early April provide some support to the indication from the March employment report that job growth has slowed,” wrote economists at RDQ Economics. “However, while the four-week average of claims has risen for two straight weeks, this average for the April employment survey period is still below the average level of claims reported for the last six months. Nevertheless, initial claims have been appreciably above our forecasts for two weeks and a failure over the next couple of weeks of initial claims to move back toward levels seen earlier this year would make us a little uneasy about our expectations for continued labor market improvement.”

In other economic news, existing home sales fell 2.6% in March to a seasonally adjusted 4.48 million-unit rate, after an upwardly revised 4.60 million rate in February. The figure failed to match the 4.62 million sales economists had predicted.

Also, the Philadelphia Fed index expanded at a slower pace in April than it did in March as the general business conditions index fell to 8.5 from 12.5. The figure came in way below the 12.0 reading expected by economists.

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