The municipal market was firmer Friday, despite Treasury market losses. Traders said tax-exempt yields were lower by two to four basis points overall.

"Treasuries are off a bit, but munis are still kind of doing their thing," a trader in New York said. "We're better by a solid two or three basis points, and there are more gains out long."

"In spots, we were as much as five or six better, but overall, you're safe if you say about three or four," a trader in Los Angeles said. "We saw some decent activity, for a Friday anyway, and it was another positive day."

Trades reported by the Municipal Securities Rulemaking Board Friday showed gains. A dealer sold to a customer Illinois 5.1s of 2033 at 6.54%, down three basis points from where they were sold Thursday. A dealer sold to a customer California 5.25s of 2038 at 5.60%, four basis points lower than where they traded Thursday. A dealer sold to a customer insured Clark County, Nev., 5s of 2025 at 5.37%, four basis points lower than where they traded Thursday. A dealer sold to a customer New York City 5s of 2031 at 5.59%, three basis points lower than where they were sold Thursday.

The Treasury market showed losses Friday due to increasing supply, even as October non-farm payrolls dropped 240,000, and a revised 284,000 decline the previous month. Economists polled by Thomson Reuters had predicted a loss of 200,000 jobs.

The yield on the benchmark 10-year Treasury note, which opened at 3.69%, finished at 3.77%. The yield on the two-year note was quoted near the end of the session at 1.32%, after opening at 1.29%. And the yield on the 30-year bond, which opened at 4.20%, was quoted near the end of the session at 4.25%.

This week, a slate of economic data will be released, starting today, with October industrial production and October capacity utilization. Tomorrow, the October producer price index and October PPI core will be released, followed by October consumer price index, October core CPI, October housing starts, and October building permits on Wednesday. On Thursday, initial jobless claims for the week ended Nov. 15 will be released, along with continuing jobless claims for the week ended Nov. 8 and the October index of leading economic indicators.

Economists polled by Thomson are predicting a 0.5% dip in industrial production, 76.1% capacity utilization, a 1.0% decline in PPI, a 0.2% rise in PPI core, a 0.4% drop in CPI, a 0.2% uptick in core CPI, 800,000 housing starts, and 783,000 building permits. They are not yet projecting next week's initial jobless claims and continuing jobless claims.

Activity in the new-issue market was light Friday. However, yield levels were released on Thursday's sale of $887 million of tax and revenue anticipation notes for Puerto Rico, which were priced by Wachovia Bank NA.

According to Luis Alfaro, the executive vice president and financing director of the Government Development Bank for Puerto Rico, the $27 million portion backed by KBC Bank matures in 2009, yielding 2.40% with a 2.35% coupon. The $860 million non-KBC Bank-backed portion matures in 2009, yielding 1.65% with a 3% coupon.

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