The tax-exempt market was in limbo Thursday afternoon ahead of Friday's employment number as traders said munis were steady, ignoring stock and Treasury movements.

"There is always a lot of volatility ahead of the numbers but tomorrow carries more weight than a normal Friday update," a Virginia trader said. "With all fed speak surrounding the numbers, it carries greater implications."

Treasuries strengthened Thursday afternoon as some traders bet on a smaller-than-expected number today. "It seems like this number could disappoint so there is a little hedging with stronger Treasuries. And with muni supply low and so much volatility in Treasuries, they are more than happy to take over and ride this thing out."

This trader added that with the June 1 reinvestment money, the supply that did hit the market this week did fine. "A bid with a little size to it has held up well. Bids have come in pretty healthy."

In the primary market Thursday, Bank of America Merrill Lynch priced $107.5 million of Los Angeles County Sanitation Districts Financing Authority capital projects revenue bonds, rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's. Yields ranged from 0.12% with a 1% coupon in 2013 to 2.11% with a 5% coupon in 2021.

Wednesday, yields on the Municipal Market Data scale ended as much as three basis points weaker. The 10-year yield rose two basis points to 2.12%. The 30-year yield was flat at 3.29% for the second session and the two-year was steady at 0.30% for the third session.

Yields on the Municipal Market Advisors 5% scale ended as much as two basis points higher. The 10-year yield rose two basis points to 2.18% and the 30-year yield increased one basis point to 3.40%. The two-year finished steady at 0.36% for the sixth session.

Treasuries were stronger Thursday afternoon, reversing morning losses. The benchmark 10-year yield fell five basis points to 2.05% and the 30-year yield slid four basis points to 3.21%. The two-year was flat at 0.30%.

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