Trading in the tax-exempt market was busier than expected on a holiday-shortened session as dealers were rushing ahead of the early 2 p.m. close.

SIFMA recommends an early close today and a full close Friday for the Easter holiday.

"It's busy," a New York trader said, adding trades are mostly flat.

Municipal bond market scales ended slightly stronger Wednesday after a quiet Monday and Tuesday.

Yields on the Municipal Market Data triple-A GO scale ended as much as three basis points stronger. The 10-year yield fell three basis points to 1.91% while the 30-year yield closed down two basis points to 3.09%. The two-year finished flat at 0.31% for the 27th consecutive session.

Yields on the Municipal Market Advisors 5% coupon triple-A benchmark scale ended as much as three basis points lower. The 10-year yield slid three basis points to 1.96% while the 30-year yield fell one basis point to 3.19%. The two-year held at 0.33% for the 22nd session.

Treasuries were steady Thursday morning. The benchmark 10-year yield and 30-year yield traded flat at 1.85% and 3.09%, respectively. The two-year was steady at 0.25%.

In economic news, fourth quarter GDP numbers show the economy grew at an annual rate of 0.4%, just short of the 0.5% expected by economists. It was the weakest quarter since 0.1% annualized growth in the first quarter of 2011.

"Although the expenditure data now show real GDP growth in the fourth quarter slightly further away from the zero mark than previously reported, the income estimate is decidedly more upbeat, showing real GDP growth in the fourth quarter at 2.6%," wrote economists at RDQ Economics. "This alternative picture of fourth-quarter growth fits better with the labor market data, which showed a 1.7% increase in total private sector hours worked in the fourth quarter, and the industrial production data, which showed an increase in manufactured output of 2.4%."

In other economic news, initial claims rose 16,000 to 357,000 in the week ending March 23, above expectations of 338,000.

"The most important information on jobless claims today was that the encouraging picture of lower claims thus far in 2013 withstood the new seasonal adjustment factors, which left the average level of claims over the first 12 weeks of the year virtually unrevised at 353,000," RDQ economists wrote. "We believe the claims data continue to signal a slowing in the rate of job layoffs in the first quarter of 2013 and we look for another month of payroll growth at or above 200,000 in March."

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