The municipal market was firmer by about two or three basis yesterday, posting gains during the afternoon after a mostly unchanged morning.

"We were quiet in the morning, but we've picked up a bit," a trader in New York said. "I'd say we're better a few basis points at this point. Probably about two basis points overall, two or three even. I'd certainly say we're cheaper a good three basis points on the long end. It's still somewhat quiet, but there's more activity than there was."

Trades reported by the Municipal Securities Rulemaking Board yesterday showed some gains. Bonds from an interdealer trade of New York 5.25s of 2026 yielded 5.27%, down one basis point from where they were sold Monday. A dealer bought from a customer insured Pennsylvania 4.5s of 2023 at 3.92%, even with where they traded Monday. A dealer sold to a customer Port Authority of New York and New Jersey 4.75s of 2032 at 5.05%, even with where they were sold Monday. Bonds from an interdealer trade of Chicago 5s of 2022 yielded 4.22%, down two basis points from where they traded Monday.

"It's a bit firmer," a trader in Los Angeles said. "It wasn't too active out there today, but there was a noticeable firmer tone. We were probably better a good two basis points."

The Treasury market showed gains yesterday. The yield on the benchmark 10-year note, which opened at 2.86%, was quoted near the end of the session at 2.79%. The yield on the two-year note was quoted near the end of the session at 0.85% after opening at 0.86%. The yield on the 30-year bond, which opened at 3.71%, was quoted near the end of the session at 3.66%.

As of Monday's close, the triple-A muni scale in 10 years was at 109.8% of comparable Treasuries, according to Municipal Market Data. Additionally, 30-year munis were 129.1% of comparable Treasuries. Also, as of the close Monday, 30-year tax-exempt triple-A-rated general obligation bonds were at 140.1% of the comparable London Interbank Offered Rate.

In the new-issue market yesterday, Morgan Stanley priced $146.5 million of public utility revenue bonds for Richmond, Va.. The bonds mature from 2012 through 2029, with term bonds in 2035 and 2040. Yields range from 1.42% with a 3% coupon in 2012 to 5.05% with a 5% coupon in 2040. The bonds, which are callable at par in 2019, are rated Aa3 by Moody's Investors Service, AA by Standard & Poor's, and AA-minus by Fitch Ratings.

Barclays Capital priced $118.1 million of tax-exempt and taxable bonds for the Maine Health and Higher Educational Facilities Authority. Bonds from the $98.5 million tax-exempt Series A contain split maturities in 2039, yielding 5.125% priced at par and 5.12% with a 5% coupon. The bonds are callable at par in 2019. Bonds from the taxable $19.6 million series mature in 2039, yielding 6.67% priced at par. The credit is rated Aa2 by Moody's.

Morgan Stanley priced $72.9 million of excise-tax revenue refunding bonds for Denver. The bonds mature in 2021 and 2023, yielding 4.75% and 5.05%, both with 6% coupons. The bonds, which are insured by Assured Guaranty Corp., are callable at par in 2019. The underlying credit is rated A2 by Moody's, A-minus by Standard & Poor's, and A-plus by Fitch.

New York's Niskayuna Central School District competitively sold $41 million of bonds to Citi with a net interest cost 3.62%. The bonds mature from 2010 through 2024, with yields ranging from 1.85% with a 3% coupon in 2013 to 4.10% with a 4% coupon in 2024. Bonds maturing from 2010 through 2012 and in 2022 were not formally re-offered. The bonds, which are callable at par in 2018, and backed by Assured Guaranty. The underlying credit is rated Aa2 by Moody's and AAA by Standard & Poor's.

In economic data released yesterday, retail sales dropped 1.1% in March after a revised 0.3% rise in January. Economists polled by Thomson Reuters had predicted a 0.3% rise.

Excluding autos, retail sales fell 0.9% in March, after a revised 1.0% gain the previous month. Economists polled by Thomson had predicted no change.

The producer price index fell 1.2% in March, after a 0.1% rise in Januaru. Economists polled by Thomson Reuters had predicted no change.

The PPI core posted no change in March, after a 0.2% gain the prior month. Economists polled by Thomson had predicted a 0.1% climb.

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