It was a clean sweep in the municipal market Thursday as tax-exempt yields fell to record low levels on 10-, 20-, and 30-year maturities. For 10-years, it was the eighth consecutive session of falling yields.

But because Treasuries rallied Thursday as well, muni ratios remained strong. The 30-year Municipal Market Data curve pushed above 100% of comparable Treasuries.

"There's just a lot of cash in munis now," a trader in New York said. "And there's really not anything pushing us back. We just keep firming up day after day, and yields just keep going lower and lower."

Also Thursday, New Jersey came to market with $2.25 billion of tax and revenue anticipation notes that mature in June 2011.

The deal came just one day after the state settled Securities and Exchange Commission charges of violating securities fraud laws by failing to disclose to bond investors that it was underfunding its two largest pension plans.

The state neither admitted nor denied the SEC's findings and said it will cease and desist from committing any further violations. They were not fined.

The deal was priced competitively and sold to various bidders, with JPMorgan taking both the largest amount of the deal and the greatest number of pieces.

JPMorgan won a total of $2.05 billion of the transaction, in four components.

The largest piece, worth $750 million, was won with an effective rate of 0.33%, eight basis point higher than Thursday's one-year MMD triple-A scale.

JPMorgan also won chunks worth $550 million, $500 million, and $250 million, with effective rates of 0.34%, 0.32%, and 0.31%, which are nine, seven, and eight basis points higher than Thursday's MMD one-year yield, respectively.

Two other $100 million portions of the deal were sold to Citi and Goldman, Sachs & Co., with effective rates of 0.33% and 0.34%, eight and nine basis points higher than Thursday's one-year MMD scale.

The credit carries short-term ratings of MIG-1 by Moody's Investors Service, SP-1-plus by Standard & Poor's, and F1-plus by Fitch Ratings.

Meanwhile, the bond rally continues. The MMD triple-A scale yielded a record-low 2.30% in 10 years and a record-low 3.42% in 20 years Thursday, down from levels of 2.32% and 3.44% Wednesday. The scale yielded 3.78% in 30 years Thursday, also a new record, following 3.81% Wednesday.

Thursday's levels represent the eighth straight new low for 10-year munis, and the first record-breaking rally in 20 and 30 years since 2009. This also marks the first time record lows were reached in 10, 20, and 30 years on the same day since Oct. 2, 2009.

Thursday's triple-A muni scale in 10 years was at 89.1% of comparable Treasuries and 30-year munis were at 103.3%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 114.9% of the comparable London Interbank Offered Rate.

The Treasury market showed gains Thursday. The benchmark 10-year note was quoted near the end of the session at 2.58% after opening at 2.63%. The 30-year bond finished at 3.66% after opening at 3.74%. The two-year note was quoted near the end of the session at 0.49% after opening at 0.50%.

Elsewhere in the new-issue market Thursday, Goldman Sachs priced $116.7 million of new-money and refunding revenue bonds for the Washington Health Care Facilities Authority on behalf of Seattle Children's Hospital.

Bonds from the $75 million new-money Series A mature in 2040, yielding 4.65% with a 5% coupon. The bonds are callable at par in 2020.

Bonds from the $41.7 million refunding Series B mature from 2011 through 2022, with yields ranging from 0.90% with a 3% coupon in 2011 to 3.60% with a 5% coupon in 2022. The bonds are callable at par in 2020.

The credit is rated Aa3 by Moody's and AA by Fitch.

Piper Jaffray & Co. priced $100 million of tax anticipation note financing program certificates of participation for the Arizona School District. The debt matures in July 2011, yielding 0.42% with a 1.5% coupon.

The credit is rated MIG-1 by Moody's and SP-1-plus by Standard & Poor's.

In economic data released Thursday, initial jobless claims increased 12,000 to 500,000 for the week ending Aug. 14. Continuing claims decreased to 4.478 million in the week ending Aug. 7.

Economists expected 476,000 initial claims and 4.500 million continuing claims, according to Thomson Reuters median estimate.

The composite index of leading economic indicators grew 0.1% in July.

LEI was revised to a 0.3% decline in June, originally reported as a 0.2% drop. The coincident index rose 0.2% in July, after a revised 0.1% decrease in June, originally reported as unchanged, while the lagging index rose 0.4% after an unrevised 0.1% increase in June.

The LEI stands at 109.8, the coincident index is at 101.4 and the lagging index is at 107.9.

Economists polled by Thomson Reuters predicted LEI would be up 0.2% in the month.

The region's manufacturing sector weakened in August, as the general business conditions index slipped to negative 7.7 from positive 5.1 in July, this month's Federal Reserve Bank of Philadelphia Report on Business indicates.

Economists surveyed by Thomson Reuters predicted a reading of 7.0 for the index.

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