NEW YORK - Supply and demand factors within the municipal bond market, as well as a weaker stock market, pushed tax-exempt bonds higher Thursday afternoon.

"It's very strong," a New York trader said. "There has been a lot of New York issuance and some Massachusetts Port Authority bonds and everything that's been priced has been bumped. Some were bumped as high as 19 basis points and it's just big reinvestment time and not a lot of supply."

He added, supply in the first week of July was very low due to the Fourth of July holiday and so there is pent up demand. "There are people putting money to work and stocks being in trouble is helping us also."

Munis continued to strengthen Thursday afternoon, according to the Municipal Market Data scale. Yields inside four years were steady while the five- to nine-year yields fell as much as two basis points. Outside 10 years, yields plunged as much as six basis points.

On Wednesday, munis were stronger. The 10-year yield closed at 1.77%, 10 basis points above its record low of 1.67% set Jan. 18. The 30-year yield hit a record low as recorded by MMD by falling to 3.02%. It beat the previous record of 3.04% set on June 1. The two-year was steady at 0.32% for the 28th consecutive session

Treasuries were stronger Thursday afternoon. The benchmark 10-year yield and the 30-year yield each dropped three basis points to 1.49% and 2.58%, respectively. The two-year yield fell one basis point to 0.27%.

In the primary market, JPMorgan priced $427.7 million of Tennessee State School Bond Authority higher education facilities second program bonds in three series. The credit is rated Aa1 by Moody's Investors Service, AA by Standard & Poor's, and AA-plus by Fitch Ratings. Pricing details were not available by press time.

RBC Capital Markets priced $211.3 million of Oakland, Calif., taxable pension obligation bonds, rated Aa3 by Moody's and A-plus by Standard & Poor's. Prices were not yet available.

Piper Jaffray priced $126.2 million of Irvine, Calf., limited obligation improvement bonds, rated BBB-plus by Standard & Poor's. Yields ranged from 0.65% with a 2% coupon in 2013 to 3.98% with a 4% coupon in 2029. The bonds are callable at par in 2022.

In the competitive market, Wells Fargo Securities won the bid for $290 million of Miami-Dade County, Fla., School District tax anticipation notes, rated MIG-1 by Moody's. The notes yielded 0.14% with a 2.5% coupon.


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