Municipal bond and note prices rallied yesterday after gross national product data showed lower than expected inflation statistics.

Real gross national product advanced near expectations at an annual rate of 2.4% in the third quarter. But both the implicit and fixed-weight inflation measures were lower than expected. The implicit deflator rose 1.8%, down from the 4.5% gain in second quarter, and the fixed weight deflator was up only 1.8%, after a 3.1% gain during the second quarter. Prices gained more momentum when the Conference Board reported consumer confidence had plunged to recessionary levels in October.

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