The Bond Buyer’s weekly yield indexes declined this week as the municipal market firmed in each of the week’s sessions.

“The big story is still steepening, to me,” said Evan Rourke, portfolio manager at MD Sass. “Outside of that, there was fairly strong demand going into [yesterday]. But [yesterday] you really started to see the slowdown a little bit, and I think some of that may be due to the fact that you’ve gotten to a point where people are starting to get comfortable with the trading levels on the bond insurers, and the news the last couple of days has thrown that all out of whack again, and people are trying to figure out what the right level is.”

“You’re seeing some good A-rated bonds with insurance trade almost as if they weren’t insured,” Rourke continued. “I think that’s put a bit of a pall over the market [yesterday], where Treasuries are having a bit of a rally, and munis aren’t rallying quite as much.”

The municipal market was firmer by one or two basis points Friday, in light trading, in a session largely free of market-moving economic data. Then, Monday, the tax-exempt market was firmer by about one basis point overall, with both the economic and new-issue calendars light.

On Tuesday, muni yields were lower by about three basis points, as most economic data came in weaker than expected. Additionally, the week’s largest deal was priced in the new-issue market, as Lehman Brothers priced $876 million of bonds for Chicago, to benefit O’Hare International Airport, completing a sale that was originally slated to hit the market last year. The city planned to sell the bonds in November, but decided to hold it due to a rise in interest rates over the fall that would have cut the savings of the refunding component.

Munis were again slightly firmer Wednesday, with yields dropping one or two basis points. And yesterday, tax-exempts were firmer by about two or three basis points, following the Treasury market.

The Bond Buyer 20-bond index of GO yields fell six basis points this week to 4.15%, its lowest level since March 15, 2007, when it was 4.13%.

The 11-bond index also dropped six basis points to 4.08%, its lowest level since March 15, 2007, when it was 4.07%.

The revenue bond index fell three basis points to 4.63%, the lowest level since July 26, 2007, when it was also 4.63%.

The 10-year Treasury note fell 17 basis points to 3.73%, its lowest level since July 10, 2003, when it was 3.67%.

The 30-year Treasury bond fell 11 basis points to 4.34%, its lowest level since Sept. 1, 2005, when it was 4.29%.

The Bond Buyer one-year note index fell 11 basis points to 2.57%, its lowest level in almost three years, since when it was 2.55% on March 23, 2005.

The weekly average yield to maturity on The Bond Buyer 40-bond municipal bond index finished at 4.74%, down four basis points from last week’s 4.78%. It is the lowest level since Oct. 25, 2007, when it was 4.73%.

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