The tax-exempt market traded steady Friday morning, despite Treasuries posting losses after a better-than-expected jobs report.

"Munis are not following Treasuries lower which is weird," a New York trader said, adding munis were trading flat. "Traders are sticking put with their levels and hoping to make even more money."

On Thursday, the 10-year Municipal Market Data yield closed steady at 1.67% while the 30-year yield finished flat at 2.84% for the third session. The two-year closed flat for the eighth session at 0.30%.

Since munis began their steady to firmer streak on Sept. 17, the 10-year yield has plummeted 26 basis points from when it traded at 1.93%. The 30-year yield has plunged 22 basis points from when it traded at 3.06%.

The 10-year now hovers only seven basis points above its record low of 1.60% set July 26. The 30-year trades only five basis points above is record low of 2.79% hit July 25.

Treasuries were much weaker Friday morning after a better-than-expected jobs report was released. The benchmark 10-year yield jumped four basis points to 1.72% while the 30-year yield spiked up six basis points to 2.95%. The two-year yield increased one basis point to 0.26%.

In economic news, non-farm payrolls rose 114,000 in September with the unemployment rate falling to 7.8%.

The bottom line is, "an overall better-than-expected jobs report, consistent with most recent data that suggest the economy is gaining some momentum," wrote Sal Guatieri, senior economist at BMO Capital Markets. "The sizeable drop in the unemployment rate could lift the President's re-election chances following a post-debate dip."

"This report is a tale of two labor markets," wrote economists at RDQ Economics. "The establishment survey painted a picture of moderately growing employment over the last three months but at a marginally slower pace than over the last year. At this pace of job creation, the unemployment rate should be barely drifting lower given underlying demographic trends."

"In contrast, the household survey painted a picture of a sharply falling unemployment rate - down 1.2% points over the last 12 months," the economists wrote. "Such a rapid decline in the unemployment rate would be consistent with 4% to 5% real economic growth historically but much of the decline is accounted for by people dropping out of the labor force."

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