The tax-exempt market posted gains Friday afternoon though traders remained skeptical about how long a rally could last.

"You look at trades and it feels like people are really grabbing for offerings," a Texas trader said. "But when the market snaps back, especially on a Friday, it's hard to embrace anything. The past few weeks have been such a whipsaw."

This trader added the market has been driven by sentiment. "With the headlines out of Detroit and mutual fund outflows, who are the real buyers right now? The market is one piece of good news or bad news away from three points in either direction. We could walk in Monday and it could be in the other direction or up another few points."

Thursday, yields on the Municipal Market Data scale ended as much as two basis points higher. The 10-year yield increased one basis point to 2.77%. The 30-year was steady at 4.31% for the second session and the two-year finished flat at 0.43% for the seventh consecutive session.

Yields on the Municipal Market Advisors scale ended as much as two basis points higher. The 10-year yield increased two basis points to 2.96% and the 30-year yield rose one basis point to 4.39%. The two-year was steady at 0.54% for the second session.

Treasuries were stronger Friday afternoon. The benchmark 10-year yield slipped two basis points to 2.57% and the 30-year yield fell three basis points to 3.63%. The two-year yield fell one basis point to 0.33%.

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