Nearly all The Bond Buyer's weekly yield indexes declined again during the past week as a year-end rally continued to push up prices for municipal bonds, particularly high-quality debt.

The muni market has been firmer all week as prices partially rebounded from sharp downturns seen in the second half of the year. Yields for certain maturities and quality credits are now at their lowest in months.

Daniel Lennon, a branch manager for GMS Group LLC, said his traders are telling him some of the institutional buyers that have been absent from the market are starting to creep back in.

"A lot of the bigger buyers are coming back in," he said. "They had to sell for whatever the reasons were, and they did. Now, they seem to be coming back in."

The rally this week did not have much good fundamental news supporting it.

In the past week, consumer confidence tumbled to an all-time low and the Standard & Poor's Case-Shiller home-price index showed an 18% decline in the past year as of the end of October.

Moody's Investors Service cautioned that many municipalities may face downgrades during this recession because of plunging property values and tax receipts.

Still, Lennon said buyers continue to recognize good value in munis.

Treasuries have become very expensive during a flight to quality, said Fred Yosca, managing director and head of trading at BNY Capital Markets LLC. Comparatively, munis seem inexpensive and a good value, he said.

The Bond Buyer 20-bond index of GO yields declined nine basis points last week to 5.24%, which is the lowest level for the index since Nov. 20.

The 11-bond index of higher-grade 20-year GO yields declined nine basis points to 5.01%. That is the lowest yield since Sept. 18, the week the Lehman Brothers Holdings Inc. bankruptcy prompted a worldwide flight to safety and pushed yields on almost everything except Treasuries higher.

The revenue bond index, which measures 30-year revenue bond yields, declined seven basis points to 6.00%. This is the lowest the index has been since Nov. 20.

The upward swing in muni prices came despite a sell-off in Treasuries. Munis and Treasuries until this year typically mirrored each other. The credit crisis has disentangled that relationship.

The 10-year Treasury note yield rose seven basis points to 2.22%, although it remained well below its 2.62% level from three weeks ago.

The 30-year Treasury bond yield rose six basis points to 2.68%.

The Bond Buyer one-year note index, which measures one-year municipal note yields, jumped 10 basis points to 1.28%.

The weekly average yield to maturity for the 40 bonds in the Bond Buyer municipal bond index, which is calculated daily, declined nine basis points to 5.96%. This is the lowest average yield to maturity for the index since the week ended Nov. 20, when it was 5.92%.

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