Following a fairly quiet early week, the tax-exempt market was set to kick off a busy day in the primary and secondary markets Thursday.

The European Central Bank announced a new bond purchasing program, pushing stock markets higher and Treasury bonds lower.

Still, traders said the muni market wasn't necessarily falling in step. "We are not really following," a New York trader said. The market is a little off but I haven't noticed much."

He added munis continued to be impacted by supply and demand patterns. "We are still undersupplied this week so paper is moving well. We might be a little cheaper here and there but paper is moving well. The secondary is still well bid for and new issues are going fine. So we are range bound. We could be up a little or down a little but we are range bound."

In the primary market, the biggest deals of the week are expected to price. Ramirez & Co. is expected to price $271.5 million of Chicago second-lien wastewater transmission revenue project bonds, rated Aa3 by Moody's Investors Service, A-plus by Standard & Poor's and AA by Fitch Ratings.

Barclays is expected to price $181.3 million of Illinois Finance Authority revenue bonds for the OSF Healthcare System. The bonds are rated A3 by Moody's and A by Standard & Poor's and Fitch.

Wells Fargo Securities is expected to sell $175 million of San Antonio Water System revenue and refunding bonds, rated Aa1 by Moody's, AA by Standard & Poor's, and AA-plus by Fitch.

Bank of America Merrill Lynch is expected to sell Tampa, Fla., bonds for the H. Lee Moffitt Cancer Center Project, rated A1 by Moody's and A-plus by Standard & Poor's.

In the competitive market, Orange County, Fla., is expected to auction $100.6 million of sales tax revenue refunding bonds, rated Aa2 by Moody's, AA by Standard & Poor's and AA-plus by Fitch.

On Wednesday, the 10-year Municipal Market Data yield closed steady at 1.73% while the 30-year yield finished flat for the fourth session at 2.89% and the two-year closed at 0.29% for the 29th consecutive session.

The 10-year yield now hovers only 13 basis points above its record low of 1.60% set July 26. The 30-year trades only 10 basis points above the 2.79% record low set July 25.

Treasuries were much weaker Thursday morning after the European Central Bank announced a new bond buying program. The benchmark 10-year yield and the 30-year yield spiked up seven basis points each to 1.66% and 2.77%, respectively. The two-year yield jumped two basis points to 0.27%.

In economic news, seasonally adjusted initial jobless claims fell 12,000 to 365,000 for the week ending Sept. 1, coming in better than the 370,000 expected by economists.

Continuing claims fell 6,000 to 3.322 million for the week ending Aug. 25.

"Initial jobless claims averaged 370,000 in August - this is modestly higher than July's average of 366,000, however, initial claims in July were affected by seasonal adjustment issues related to shifting patterns of summer auto plant shutdowns," wrote economists at RDQ Economics. "The level of jobless claims in August is below the average reported for the second quarter and in line with the first-quarter's average."

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