Yields on The Bond Buyer's municipal bond indexes dropped to their lowest levels since January, as light supply and hopes of an easing in Federal Reserve Board policy kept the municipal market's tone firm for most of the week.

The average yield to maturity of the 40 general obligation and revenue bonds used in the daily Municipal Bond Index fell two basis points, to 6.61% from 6.63% last Thursday. On Wednesday, the yield to maturity fell to 6.6.%, its lowest level since The Bond Buyer began calculating the yield on Jan. 1, 1985.

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