Yields in the municipal market declined Friday for the fourth straight session, as retail and institutional demand for bonds persisted and firmness continued to permeate the market.

Traders said tax-exempt yields were lower by seven to nine basis points.

"It's obviously been a very positive week, and that's just continuing right here," a trader in New York said. "Demand for bonds is as high as it's been in a long while, a lot is trading, and we're just doing a lot of business. I don't know how long this is going to last, but we're just enjoying the ride right now."

Trades reported by the Municipal Securities Rulemaking Board Friday showed gains. Bonds from an interdealer trade of insured Brevard County, Fla., 5s of 2032 yielded 6.12%, down five basis points from where they were sold Thursday. A dealer sold to a customer insured Chicago 5s of 2025 at 5.14%, four basis points lower than where they traded Thursday. Bonds from an interdealer trade of Harris County, Tex., 5.5s of 2013 yielded 5.83%, five basis points lower than where they traded Thursday. A dealer sold to a customer insured New York State Thruway Authority 5.5s of 2013 at 3.95% at 3.95%, six basis points lower than where they traded Thursday.

"We did a good amount of business. The firmness in the market just continues," a trader in Los Angeles said. "I can't imagine anything will change next week either. It's long overdue."

The Treasury market, however, was mixed Friday. The yield on the benchmark 10-year Treasury note, which opened at 3.68%, was quoted near the end of the session at 3.72%. The yield on the two-year note was quoted near the end of the session at 1.55%, after opening at 1.60%. And the yield on the 30-year bond, which opened at 4.05%, was quoted near the end of the session at 3.72%.

Buyers returned to the muni market in droves Tuesday, pushing yields lower by at least five basis points, and as much as 10 in spots.

However, that was just a harbinger of what was to come Wednesday, when municipals experienced a staggering rally that saw The Bond Buyer's 40-bond index post the largest gains since it began in 1984. Traders said tax-exempt yields plunged 15 to 20 basis points on average, with munis firming as much as 25 basis points on the long end, as demand for munis was enormous.

And the positive tone held strong Thursday, as munis gained another eight to 10 basis points in an active market.

"It's been a tremendous week for munis," a second trader in New York said. "And we capped off the week nicely."

According to Municipal Market Data, triple-A 30-year general obligation bonds yielded 5.90% last Monday. As of Friday's close, they yielded 5.17%, a staggering 73 basis point decline.

In economic data released Friday, existing home sales came in at 5.180 million in September, after an unrevised 4.910 million the previous month. Economists polled by Thomson Reuters had predicted 4.920 million existing home sales.

Activity in the new-issue market was light Friday.

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