Trading in the tax-exempt market stayed centered on short-term bonds, following a similar trading pattern Wednesday, after significant losses on longer maturing debt kept buyers inside seven years.

With most of the new deals in the primary market priced earlier in the week, traders eyed the secondary. "The short-end bid is holding up well," a New York trader said. "It's seven years and in."

Wednesday, yields on the Municipal Market Data scale ended as much as eight basis points higher. The 10-year yield increased four basis points to 2.76% and the 30-year yield rose eight basis points to 4.31%. The two-year finished steady at 0.43% for the sixth consecutive session.

Yields on the Municipal Market Advisors scale ended as much as seven basis points higher. The 10-year yield increased four basis points to 2.94% and the 30-year yield rose seven basis points to 4.38%. The two-year yield increased one basis point to 0.54%.

Treasuries were weaker. The benchmark 10-year yield rose three basis points to 2.62% and the 30-year yield rose two basis points to 3.67%. The two-year was steady at 0.36%.

In economic news, durable goods orders rose 4.2% in June, or $9.9 billion, to $244.5 billion. Excluding transportation, new orders were flat after a 1% rise in May. Economists expected a 1.2% increase and a 0.5% increase excluding transportation.

"Although a massive surge in aircraft orders has inflated the headline gains in durable goods orders over the last three months, we think the details of the report provide some encouraging signs for the outlook for manufacturing activity in the second half of the year," wrote economists at RDQ Economics. "We think that manufacturing activity will add more to growth in the second half of the year than it did in the first half."

In other economic news, initial jobless claims rose 7,000 to 343,000 in the week ending July 20, rising more than the 340,000 expected by economists.

"Although we are still in the period where seasonal distortions from summer auto factory shutdowns can heavily influence the claims data, it appears from the four-week average of claims that there is no evidence of a pickup in job losses in July, which may augur well for the net payroll number in next week's employment situation report for the month," RDQ economists wrote. "At around 345,000, the average is in the middle of the range that we have seen during the second quarter. We continue to believe that the labor market is showing the sustained improvement that will permit the FOMC to begin dialing back bond purchases in September."

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.