NEW YORK – The tax-exempt market strengthen for the third trading session this week as fears from Europe spill over into the Treasury market and push munis higher.

A New York trader said that judging from Europe, the world looks like it’s about to fall apart. “Bonds are rallying and it’s all coming from Europe,” he said.

Munis were firmer again Wednesday morning after strengthening all week, according to the Municipal Market Data scale. Yields inside four years were steady while the five- and six-year yield dropped one basis point. Outside seven years, yields dropped as much as three basis points.

On Tuesday, the two-year yield closed flat at 0.31% for the 15th consecutive trading session. The 10-year yield and the 30-year yield each plummeted four basis points to 1.76% and 3.09%.

The 10-year hasn’t hit 1.76% since Feb. 3 when it yielded 1.77%. It remains eight basis points above its record low of 1.68% set Jan. 31. The 30-year beat its previous record low of 3.13% set Monday which beat the prior record of 3.14% last hit on Feb. 2.

Treasuries were mostly stronger Wednesday morning. The benchmark 10-year yield dropped four basis points to 1.81% while the 30-year yield fell three basis points to 3.01%. The two-year rose one basis point to 0.27%.

In the primary market, Morgan Stanley is expected to price for retail the largest deal of the week, $415 million of California Health Facilities Financing Authority revenue bonds, rated Aa3 by Moody’s Investors Service and AA-minus by Standard & Poor’s and Fitch Ratings.

RBC Capital Markets is expected to price $177.6 million of Arizona Sports and Tourism Authority senior revenue refunding bonds, rated A1 by Moody’s and A by Standard & Poor’s.

Bank of America Merrill Lynch is expected to price for institutions $160 million of Carolinas Healthcare System bonds, rated Aa3 by Moody’s and AA-minus by Standard & Poor’s.

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