The municipal market was firmer by one to two basis points Friday, in light trading, in a session largely free of market-moving economic data.

“The trades you are seeing are a touch better, by one or two basis points,” a trader in New York said. “The activity level seems muted with less enthusiasm than we’ve seen all week.”

In light trading, munis stayed firm, and trading occurred.

“It’s been a steady process of trading bonds for everyone,” said a trader in Los Angeles. “There are buyers, and we’ve been trading some discounts especially, that’s definitely the theme. The market is good, munis seemed to want to get involved and traded up.”

Trades reported by the Municipal Securities Rulemaking Board Friday showed some gains. A dealer sold to a customer New York State Urban Development Corp. 4s of 2012 at 3%, down three basis points from where they traded Thursday. Bonds from an interdealer trade of insured California 4.25s of 2029 yielded 4.57%, down one basis point from where they sold Thursday. Bonds from an interdealer trade of insured Apple Valley, Minn., 4.35s of 2030 yielded 4.06%, down three basis points from where they traded Thursday.

The Treasury market showed some gains. The yield on the benchmark 10-year Treasury note, which opened at 3.89%, was quoted near the end of the session at 3.80%. The yield on the two-year note closed at 2.59%, after opening at 2.69%.

The economic calendar was light Friday. This week, a full slate of potentially market-moving data will be released. Tomorrow, December retail sales and retail sales excluding autos will be released, along with the December producer price index report, the January empire state manufacturing index, November business inventories, and November business sales.

On Wednesday, the December consumer price index report will be released, while Thursday will see the release of initial jobless claims for the week ended Jan. 12, continuing jobless claims for the week ended Jan. 5, and the January Philadelphia Federal Reserve survey. On Friday the preliminary January University of Michigan consumer sentiment index and the December leading indicators number will be released.

Economists polled by IFR Markets are predicting no growth in retail sales, a 0.1% drop in retail sales excluding autos, a 0.2% gain in the PPI and the PPI core, a reading of 9.75 on the empire state manufacturing index, a gain of 0.5% for business inventories, and 1.7% growth for business sales.

IFR economists aksi are predicting a gain of 0.2% for the CPI and the CPI core, 335,000 initial claims, 2.86 million continuing claims, a fall of 1.3% on the January Philadelphia Fed survey, a reading of 74.7 for the preliminary University of Michigan consumer sentiment index, and a drop of 0.1% for the leading indicators.

Activity in the new issue market was light Friday.

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