The municipal market showed gains Friday, as it did in every session last week. Traders said tax-exempt yields were unchanged to firmer by two or three basis points, with most of the gains found on the long end of the curve.

"We're a bit better again," a trader in New York said. "We've been seeing pretty steady gains in the marketplace for the last couple of weeks, and we're still seeing that firmness out there. It's more on the long end today, maybe two or three basis points better out there, and elsewhere along the curve it's still pretty flat, to maybe a tick better. But there's definitely at least a firmer tone out there."

"We've seen a pretty decent rally the last week or two, steadily picking up a couple basis points here, a couple there, and I am not really seeing signs of it stopping," a trader in Los Angeles said. "We haven't really had days recently where we pick up more than a couple basis points in a day, but there's just been a firmness in the market that has persisted, and the gains have been pretty steady."

The Treasury market was mixed Friday. The yield on the benchmark 10-year note, which opened at 3.38%, finished at 3.32%.

The yield on the two-year note finished at 0.99% after opening at 0.94%. The yield on the 30-year bond, which opened at 4.17%, finished at 4.09%.

On Friday, the Municipal Market Data triple-A scale yielded 2.59% in 10 years and 3.52% in 20 years, extending their record lows, following yields of 2.61% and 3.54%, respectively, on Thursday.

As of Friday's close, the triple-A muni scale in 10 years was at 77.2% of comparable Treasuries, according to MMD, while 30-year munis were 95.7% of comparable Treasuries. At Friday's close, 30-year tax-exempt triple-A general obligation bonds were at 99.0% of the comparable London Interbank Offered Rate.

In economic data released Friday, durable goods orders fell 2.4% in August, the largest monthly decline since January.

Orders excluding transportation goods were unchanged in August following three months of increases.

Economists had estimated durable goods orders would increase 0.5% and orders excluding transportation goods would increase 1.0%, according to the median forecast from Thomson Reuters.

The University of Michigan's final September consumer sentiment index reading was 73.5, compared to the preliminary September reading of 70.2, and August's 65.7, according to market sources. Economists polled by Thomson had predicted a 70.2 reading for the index.

New home sales increased 0.7% in August to a 429,000 annual rate in August following a downwardly revised 426,000 sales rate in July.

Economists polled by Thomson Reuters expected new home sales at a 440,000 annual rate in August, according to the median estimate.

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