The municipal bond market was stronger again Tuesday as poor economic data and still-lingering economic woes forced a risk-off trade. Fixed-income markets rallied even as yields have hovered at or near record lows for several consecutive sessions.

"Weak Richmond Fed data is causing munis to rally once again," a trader in Atlanta said. "There is not much value left in the long end, at least for me. I've been a net seller of munis the last 3 months and rotated into preferred stocks for more yield."

Indeed munis were stronger again Tuesday afternoon, according to the Municipal Market Data scale. Yields inside four years were flat while yields outside five years fell as much as three basis points.

On Monday, the two-year closed at 0.31% for the sixth consecutive trading session. The 10-year yield dropped five basis points to 1.65%, setting a record low as recorded by MMD. It beat its previous record of 1.67% set Jan. 18. The 30-year yield also plunged five basis points to set a record low yield of 2.81%, beating the previous record of 2.86% set Friday.

By finishing stronger Monday, munis extended the streak of trading flat or firmer into 21 consecutive sessions. Since this most recent rally began on June 22, yields on the 10-year have fallen 21 basis points while the 30-year yield has plunged 35 basis points.

Treasuries rallied. The benchmark 10-year yield dropped three basis points to 1.41% while the 30-year yield plunged five basis points to 2.47%. The two-year yield rose one basis point to 0.23%.

In the primary market, Wells Fargo Securities priced $322 million of Los Angeles Department of Water and Power water system revenue bonds, rated Aa2 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings.

The bonds yielded 2.99% with a 5% coupon in 2035, 3.05% with a 5% coupon in 2036, 3.08% with a 5% coupon in 2037, and 3.13% with a 5% coupon in 2043. The bonds are callable at par in 2022.

Morgan Stanley priced $280.1 million of taxable and tax-exempt Mississippi general obligation refunding bonds, rated Aa2 by Moody's, AA by Standard & Poor's, and AA-plus by Fitch.

Yields on the first series, $57.1 million of taxable GO refunding bonds, ranged from 0.784% priced at par in 2015 to 2.414% priced at par in 2022. The bonds were priced 40 basis points to 100 basis points over the comparable Treasury yields.

Yields on the second series, $43.7 million of tax-exempt GOs, ranged from 0.59% with 2% and 5% coupons in a split 2015 maturity to 2.05% with 4% and 5% coupons in a split 2023 maturity. The bonds are callable at par in 2022.

Prices on the third series, $100.6 million of Libor index bonds for the Nissan North America Inc. project were not available by press time.

Prices on the fourth series, $78.7 million of SIFMA index GO refunding bonds for capital improvement projects, were not available by press time.

In the competitive market, Bank of America Merrill Lynch won the bid for $361.3 million of Pennsylvania GO refunding bonds, rated Aa2 by Moody's, AA by Standard & Poor's, and AA-plus by Fitch. Yields ranged from 0.19% with a 3% coupon in 2013 to 1.93% with a 4% coupon in 2023.

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