The municipal market was slightly weaker yesterday. Traders said tax-exempt yields were lower by two or three basis points overall, with weakness of up to five basis points on the long end.

"It's still hard to get people interested in buying bonds," a trader in New York said. "It's tough to get anything going. We're a bit weaker. Not as much as yesterday though, but there is definite weakness out there again."

Trades reported by the Municipal Securities Rulemaking Board showed losses yesterday. A dealer sold to a customer Massachusetts 5s of 2027 yielding 5.57%, up four basis points from where they were sold Monday. A dealer sold to a customer Virginia Resources Authority 5s of 2030 at 5.79%, four basis points higher than where they traded Monday. A dealer bought from a customer California 4.5s of 2034 at 6.87%, four basis points higher than where they were sold Monday. A dealer sold to a customer Connecticut 5s of 2028 at 5.51%, three basis points higher than where they traded Monday. A dealer sold to a customer Ohio 5.25s of 2029 at 6.61%, five basis points higher than where they were sold Monday.

"Treasuries ended up having a pretty nice day, but not us," a trader in San Francisco said. "Another day, more weakness in the muni market. It seems like we're going to continue heading in this direction until someone steps into the market to do something about it. Retail can only do so much."

The Treasury market showed gains yesterday. The yield on the benchmark 10-year Treasury note, which opened at 2.74%, was quoted near the end of the session at 2.64%. The yield on the two-year note was quoted near the end of the session at 0.83% after opening at 0.94%. The yield on the 30-year bond, which opened at 3.15%, was quoted near the end of the session at 3.05%.

In the new-issue market yesterday, JPMorgan priced $308 million of general obligation bonds for New York City in two series. Bonds from a $300 million series of tax-exempt bonds mature from 2010 through 2031, with a term bond in 2035. Yields range from 2.70% with a 3% coupon in 2010 to 6.45% with a 6.25% coupon in 2035. The bonds, which are callable at par in 2018, are rated Aa3 by Moody's Investors Service, AA by Standard & Poor's, and AA-minus by Fitch Ratings. The deal also contains an $8 million taxable series, which matures in 2014 and 2015.

Pennsylvania competitively sold $300 million of GOs to JPMorgan with a true interest cost of 5.06%. The deal was originally scheduled to be $600 million, but was halved due to market conditions. The bonds mature from 2010 through 2029, with yields ranging from 4.11% with a 5% coupon in 2017 to 5.29% with a 5.25% coupon in 2024. Bonds maturing from 2010 through 2016 and from 2025 through 2029 were not formally re-offered. The bonds, which are callable at par in 2019, are rated Aa2 by Moody's and AA by both Standard & Poor's and Fitch.

Morgan Stanley priced $256.7 million of revenue bonds for the University of Texas System Board of Regents. The bonds mature from 2010 through 2022 with a term bond in 2024. Yields range from 2.14% with a 4% coupon in 2010 to 5.35% with a 5.25% coupon in 2024. The bonds are callable at par in 2018.

Wachovia Bank NA priced $125.2 million of highway revenue bonds for Hawaii. The bonds mature from 2010 through 2029, with yields ranging from 2.50% with a 4% coupon in 2010 to 6.02% with a 6% coupon in 2029. The bonds, which are callable at par in 2019, are rated Aa3 by Moody's, AA-plus by Standard & Poor's, and AA-minus by Fitch.

Morgan Stanley priced $124.7 million of transmission project revenue bonds for the Southern California Public Power Authority. The bonds mature in 2024, 2025, and have a split maturity in 2027. Yields range from 5.97% with a 5.75% coupon in 2024 to 6.26% with a 6.25% coupon in 2027. The bonds, which are callable at par in 2018, are rated Aa3 by Moody's and A-plus by Standard & Poor's.

Wachovia also priced $67.5 million of special obligation school financing bonds for the Virginia Public School Authority. The bonds mature from 2011 through 2022, with term bonds in 2026, 2028, 2032, and 2035. Yields range from 3.04% with a 4% coupon in 2011 to 6.15% with a 6.5% coupon in 2035. The bonds, which are callable at par in 2018, are rated A1 by Moody's and AA-minus by Standard & Poor's.

Knoxville, Tenn., competitively sold $45 million of wastewater system revenue bonds to Hutchinson, Shockey, Erley & Co. with a TIC of 4.67%. The bonds mature from 2011 through 2025, with yields ranging from 2.53% with a 5% coupon in 2011 to 5.48% with a 5.25% coupon in 2025. Bonds maturing in 2015, 2019, 2021, and 2023 were not formally re-offered. The bonds, which are callable at par in 2018, are rated Aa3 by Moody's and AA-plus by Standard & Poor's.

Bernalillo County, N.M., competitively sold $30 million of tax and revenue anticipation notes to Citi with a TIC of 0.98%. The Trans mature in Dec. 2009, but were not formally re-offered. The credit is rated SP-1-plus by Standard & Poor's.

In economic data released yesterday, pending home sales decreased to a reading of 88.9 in October from an upwardly revised 89.5 in September. Thomson Reuters' poll of economists had predicted a 86.5 reading.

The Treasury Department auctioned $30 billion of four-week bills at a zero high yield, a price of par.

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