Despite a dearth of activity in the primary or secondary markets Friday, muni yields held the past week’s gains. They closed the day’s session steady across the curve, according to the Municipal Market Data scale.

“The triple-A MMD, despite what Treasuries were doing, kept ratcheting down more and more, just given that all these guys are sitting in cash,” a trader in California said. “They pretty much have nothing else to choose from. At around 2% on the 10-year and 3% on the 30-year, munis are still more attractive than anything else out there, given risk-reward.”

The benchmark 10-year yield remained at 1.97% Friday, falling 20 basis points for the week. Since Oct. 12, it has fallen 61 basis points, equaling the lowest point it’s reached in 2011, which it last achieved on Sept. 23.

The tumble lowered its ratio to Treasuries to 95.17% from 106.37% four days ago, dropping under the 2011 calendar-year average of 97.27%.

The muni-Treasury ratio has gotten richer recently. It’s fallen 23 percentage points in 11 sessions since Nov. 23, and 33 percentage points from its calendar-year high of 128.42% on Oct. 5.

The two-year muni yield held fast at 0.36% for a third straight session. For the week, it dropped three basis points. The 30-year jogged in place at 3.69%, or 12 basis points lower on the week.

Treasury yields jerked awake after a listless start to the day’s session to weaken across the curve. For the week, munis outperformed their Treasury siblings.

The benchmark 10-year Treasury yield hurtled 10 basis points Friday to 2.07%.

The two-year yield inched up a basis point to 0.24%. The 30-year yield soared 11 basis points to 3.11%.

The market has not yet begun its seasonal wind-down. Industry estimates place new issuance expected to be sold this week at $5.69 billion against a revised $6.27 billion last week.

That breaks down to an estimated $1.6 billion in competitive offerings, compared with a revised $1.75 billion last week. In negotiated offerings, $4.09 billion is slated for sale, versus a revised $4.48 billion last week.

The week ended Dec. 7 saw about $1.04 billion in inflows from muni bond funds that report their flows weekly, according to Lipper FMI. It’s the highest amount of inflows the market has seen since March 10, 2010. In the week ended Nov. 30, there were net outflows of $297 million.

Most of the inflows into muni bond and tax-exempt money market funds last week resulted from large December reinvestments, RBC Capital Markets’ Chris Mauro wrote in a research post. What’s more, he added, the final destination of the cash that will inevitably flow out of the tax-exempt money market funds is an important driver of muni market performance over the next week or so.

“We expect that, despite low absolute yields,” he wrote, “a fair chunk of these [tax-exempt money market fund] deposits will find their way into municipal bond funds which, along with a light year-end new-issue calendar, should provide some solid support in the market for the balance of the year.”

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