The municipal market was slightly firmer yesterday. Traders said tax-exempt yields were lower by two to four basis points overall.

"We're doing a bit better again today," a trader in New York said. "There's demand out there, and people are getting deals done. But we're better three basis points easy, probably four in spots, maybe even a touch more out on the very long end."

Trades reported by the Municipal Securities Rulemaking Board yesterday showed gains. A dealer sold to a customer insured Oakland, Calif., 5s of 2031 at 5.31%, down three basis points from where they were sold Wednesday. Bonds from an interdealer trade of insured Illinois 5s of 2024 yielded 4.46%, two basis points lower than where they traded Wednesday. A dealer sold to a customer insured Bedford County, Pa., 5s of 2035 at 5.44%, down two basis points from where they were sold Wednesday.

A dealer sold to a customer Harris County, Texas 5.25s of 2024 at 4.10%, three basis points lower than where they were sold yesterday. A dealer sold to a customer Arizona Transportation Board 5s of 2022 at 3.75%, down two basis points from where they traded yesterday. A dealer sold to a customer Wisconsin 5s of 2023 at 4.19%, down two basis points from where they were sold yesterday.

"There's just a positive tone out there lately," a trader in Los Angeles said. "We're a few basis points better today, and it seems like that's pretty much every day at this point. But it can turn pretty quickly, so no one's taking anything for granted."

The Treasury market was somewhat mixed. The yield on the benchmark 10-year Treasury note, which opened at 2.93%, was quoted near the end of the session at 2.92%. The yield on the two-year note was quoted near the end of the session at 0.98% after opening at 0.97%. The yield on the 30-year bond, which opened at 3.68%, was quoted near the end of the session at 3.65%.

In economic data released yesterday, initial jobless claims for the week ended Jan. 31 came in at 626,000, after a revised 591,000 the previous week. Economists polled by Thomson Reuters had predicted 583,000 initial jobless claims.

Continuing jobless claims for the week ended Jan. 24 came in at 4.788 million, after a revised 4.768 million the prior week. Economists polled by Thomson had predicted 4.800 million continuing jobless claims.

Preliminary fourth-quarter non-farm productivity rose 3.2%, after a revised 1.5% increase in the previous quarter. Economists polled by Thomson had predicted a 1.1% climb.

Preliminary fourth-quarter unit labor costs climbed 1.8%, after a revised 2.6% uptick the prior reading. Economists polled by Thomson Reuters had predicted a 2.9% jump.

New factory orders for manufactured goods slumped 3.9% in December. The factory order decrease, to $362.437 billion, was larger than the 3.0% decrease projected by Thomson and came after a revised 6.5% decrease to $377.203 billion in November.

Excluding transportation, the level of all new manufacturing orders fell 4.4% to about $319.4 billion in December, following a 6.0% drop in November to $334.1 billion. Economists polled by Thomson had predicted a 4.5% decrease.

But eyes are on today's January non-farm payrolls report. Economists polled by Thomson Reuters are predicting that 524,000 jobs were lost in January.

In the new-issue market yesterday, Morgan Stanley priced $43.2 million of second-lien revenue refunding bonds for Indianapolis. The bonds mature from 2009 through 2018, with yields ranging from 2.00% with a 3% coupon in 2009 to 4.19% with a 5% coupon in 2018. The bonds, which are not callable, are rated A2 by Moody's Investors Service and A-plus by Standard & Poor's.

Barclays Capital priced $38 million of lease revenue bonds for Tacoma, Wash.-based TES Properties. The bonds mature from 2010 through 2019, with term bonds in 2024, 2029, and 2038. Yields range from 2.25% with a 4% coupon in 2010 to 5.85% with a 5.625% coupon in 2038. The bonds, which are callable at par in 2019, are rated Aa3 by Moody's and AA-plus by Standard & Poor's.

Monroe Township, N.J., competitively sold $31.4 million of bond anticipation notes to Depfa First Albany Securities LLC with a net interest cost of 0.60%. The Bans mature in 2010 with a 2% coupon, and were not formally re-offered.

First Southwest Co. priced $20.5 million of unlimited-tax school building bonds for Texas' Mount Vernon Independent School District in two series. Bonds from the $19.9 million series of current interest bonds mature from 2011 through 2029, with yields ranging from 1.85% with a 2.75% coupon in 2011 to 5.12% with a 5% coupon in 2029. The bonds are callable at par in 2019. Bonds from the $560,000 series of premium capital appreciation bonds mature in 2010. The bonds are insured by Assured Guaranty Corp. The underlying credit is rated A-plus by Standard & Poor's.

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