Nearly all The Bond Buyer's weekly yield indexes declined this week, as municipals mostly followed the Treasury market in a mixed week during which gains outweighed losses.

"Whatever improvement we've seen in the market the past week is because of our ability to digest the new issues, and a decent amount of order flow," said Fred Yosca, managing director and head of trading at BNY Capital Markets. "There really hasn't been any fundamental change in the range we've been trading in. We're very much a backwater at the moment. Not that we usually aren't. But especially so right now. We're not in the news, which is the good news."

The municipal market was firmer by two or three basis points Friday after the August non-farm payrolls data came in weaker than expected. Non-farm payrolls dropped 84,000 in August after IFR Markets predicted a decline of 75,000 jobs.

Munis were then unchanged to slightly weaker Monday, lagging behind an afternoon Treasury rally that followed an early-morning sell-off in the Treasury market.

The Treasury market showed losses Monday morning on news that, after much speculation, the U.S. government Sunday took control of troubled mortgage giants Fannie Mae and Freddie Mac, placing them under conservatorship by their federal regulator, the Federal Housing Finance Agency. However, Treasuries did an about-face in the afternoon that was perplexing to some market participants, and that munis did not follow.

"Our market is very much on the sideline of what is important in fixed income right now, which is all these credit events," Yosca said. "Between auction-rates, [government sponsored enterprises], and everything, you wouldn't expect a lot be to be happening, but there has been decent order flow."

Tax-exempts then firmed Tuesday, following gains in Treasuries. In the new-issue market, Citi priced $609 million of revenue refunding bonds for the North Texas Tollway Authority.

Munis were weaker by about one basis point Wednesday. Leading the new-issue market, Citi priced $950 million of general obligation bonds for New York City, in three series, following a three-day retail order period, which began Friday.

Then, the municipal market was firmer by about two basis points yesterday, again following Treasuries.

The Bond Buyer 20-bond index of GO yields fell eight basis points this week to 4.54%, which is the lowest since May 22, when it was 4.52%.

The 11-bond index fell seven basis points this week to 4.45%, which is the lowest since May 22, when it was 4.43%.

The revenue bond index fell six basis points this week to 5.09%, which is the lowest since July 10, when it was 5.04%.

The 10-year Treasury note yield fell one basis point this week to 3.62%, which is the lowest since April 10, when it was 3.62%.

The 30-year Treasury bond yield fell six basis points this week to 4.21%, which is the lowest since June 30, 2005, when it was 4.20%.

The Bond Buyer one-year note index, however, rose one basis point this week to 1.61%, which is the highest since Aug. 6, when it was 1.63%.

The weekly average yield to maturity on The Bond Buyer 40-bond municipal bond index finished at 5.34%, down five basis points from last week's 5.39%.

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