The municipal market was slightly firmer Friday, while in a flurry of new-issue activity Los Angeles sold $1 billion of notes.Traders said tax-exempt yields were lower by about three basis points overall.

"It's definitely a bit firmer," a trader in New York said. "We're just sort of picking up where we left off the last couple of days. There's still not a ton of activity, but the market feels strong. I'd say we're better a good two or three basis points."

Trades reported by the Municipal Securities Rulemaking Board Friday showed gains. A dealer sold to a customer New Jersey Turnpike Authority Build America Bonds 7.41s of 2040 at 6.16%, down three basis points from where they traded Thursday. A dealer sold to a customer Tennessee Housing Development Agency 5.2s of 2039 at 5.55%, down three basis points from where they were sold Thursday. Bonds from an interdealer trade of University of Texas Board of Regents BABs, 6.28s of 2041 at 5.63%, were two basis points lower than where they traded Thursday. A dealer bought from a customer New York City 5.25s of 2022 at 4.42%, down one basis point from where they were sold Thursday.

Bonds from an interdealer trade of Ohio 4.5s of 2025 yielded 4.51%, three basis points lower than where they traded Thursday. A dealer sold to a customer taxable Illinois 5.1s of 2033 at 5.98%, one basis point lower than where they traded Thursday. A dealer sold to a customer California 6s of 2038 at 5.87%, three basis points lower than where they traded Thursday. A dealer sold to a customer Dallas Area Rapid Transit BABs, 6.25s of 2034 at 6.25%, two basis points lower than where they were sold Thursday.

In the new issue market, Los Angeles sold $1 billion of notes in three tranches: roughly 25% maturing on Feb. 26, 2010 with a yield of 0.410%, about 50% maturing on April 28, 2010 with a yield of 0.450% and about $25% maturing on May 28, 2010 with a yield of 0.460%.

Meantime, the Treasury market showed gains Friday. The yield on the benchmark 10-year note, which opened at 3.41%, was quoted near the end of the session at 3.30%. The yield on the two-year note was quoted near the end of the session at 0.91% after opening at 0.92%. The yield on the 30-year bond, which opened at 4.31%, was quoted near the end of the session at 4.19%.

As of Thursday's close, the triple-A muni scale in 10 years was at 90.3% of comparable Treasuries, according to Municipal Market Data. Additionally, 30-year munis were 106.8% of comparable Treasuries. Also, as of the close Thursday, 30-year tax-exempt triple-A general obligation bonds were at 113.9% of the comparable London Interbank Offered Rate.

In economic data released Friday, import prices rose 3.2% in June, after a revised 1.4% gain the previous month. Economists polled by Thomson Reuters had predicted a 2.0% rise.

Finally, the University of Michigan's preliminary July consumer sentiment index reading was 64.6 compared to the June 70.8 final reading. Economists polled by Thomson Reuters had predicted a 70.5 reading for the index.

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