A better bid for bonds pushed prices up yesterday, helping municipals to outperform the Treasury market.

Government bonds headed lower after the Labor Department reported initial state unemployment insurance claims fell 17,000 to a seasonally adjusted 321,000 in the week ended Nov. 27. But the tax-exempt market opened with a flurry of trading to the upside that put municipal gains in front of the Treasury losses. After the morning action, traders said velocity slowed and new deals were scarce, but cash bond prices made solid 1/4-point gains on the day.

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