(Bloomberg) -- Municipal-bond prices rose in early trading, extending the biggest one-day rally in more than eleven years, as Congress and the White House struck a deal on a more than $2 trillion stimulus package to soften the impact of the economic slowdown triggered by the coronavirus.

The gains were steepest for the shortest-dated securities, which were hardest hit by the steep sell-off this month as fund managers dumped the easiest-to-unload bonds to raise cash when investors pulled money out of the market. Three-month benchmark yields dropped 19 basis points to 2.36% while those on 10-year bonds fell 13 basis points to 2.54%. Those on the longest dated securities fell 7 basis points to 3.1%.

The rally comes after the White House and the Senate reached an agreement on a massive package of spending and tax breaks in a bid to prevent the swift shutdown of much America’s economy from leading to a deep, prolonged recession. It includes about about $500 billion that can be used to back loans and assistance to companies, as well as state and local governments.

Optimism about the package helped end a two week rout in the municipal-bond market that resulted in the steepest losses in at least four decades. On Tuesday, as the deal neared, state and local bonds rallied the most since late 2008.

“The stimulus will be very helpful to the overall market,” said James Iselin, a portfolio manager at Neuberger Berman Group. He said on Tuesday the market had “really good two-way flow” and “direct buyers have become much more engaged, which is good to see.”

“The stimulus will inspire confidence that a bridge is being built to help get us to the other side as we continue to deal with challenges resulting from this unprecedented moment,” he said.

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