The tax-exempt market opened Thursday morning mostly steady, even with stronger Treasuries and better-than-expected economic data.

Municipal bond trading was active with a focus on the short-end of the curve, traders said. "It feels unchanged with a slightly more positive bias, like Wednesday," one New York trader said. "Though some trades are stronger than yesterday."

Munis took direction from a higher Treasury market, this trader said. Positive gross domestic product numbers pulled Treasuries back from their high.

The two-year and 30-year Treasury yields slid two basis points each to 0.29% and 3.75%, respectively. The benchmark 10-year yield fell one basis point to 2.63%.

In economic news, third quarter real GDP came in at 2.8%, stronger than the 2.1% expected. Economists said the real test will come with the release of fourth quarter GDP to see how much the government shutdown affected the economy.

"Inventories provided the surprise kick to real GDP growth as the 0.8-point addition raised third-quarter real GDP growth to an unexpected 2.8% gain," economists at RDQ Economics wrote. "When the 1.9% increase in the GDP deflator is overlaid on the real gain, we see that nominal GDP is estimated to have grown at a respectable 4.8% pace."

"Manufacturing is on an upswing according to the ISM and a faster pace of inventory growth often accompanies such a pickup," the economists said. "This gain in GDP combined with the upswing in the ISMs into October puts a tapering decision very much on the table in December in our view."

In other economic news, initial jobless claims fell 9,000 to 336,000 in the week of Nov. 2, according to the Department of Labor. Analysts expected 337,000 claims. The October 26 week level was revised down 5,000 to 345,000.

"The distortions related to California are beginning to dissipate from the four-week average in claims, which we see as drifting down towards the mid-330,000 area over the next few weeks," RDQ economists said. "The average level of claims in September and October is around 330,000, which is in line with the average for August."

On Wednesday, the triple-A Municipal Market Data scale ended steady to one basis point stronger. The 10-year and 30-year yields were steady at 2.51% and 4.11%, respectively. The two-year was steady for the seventh session at 0.34%.

Yields on the Municipal Market Advisors benchmark scale ended flat across the curve. The 10-year and 30-year yields were flat at 2.65% and 4.30%, respectively. The two-year was flat for the sixth session at 0.48%.

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