Most of The Bond Buyer's weekly yield indexes rose this week, as municipals weakened in most of the week's sessions, which saw light activity ahead of a long weekend.

"We've seen a little bit of steepening, mostly at the long end," said Evan Rourke, portfolio manager at MD Sass. "Yields on the long end have been backing up a little bit. Munis definitely underperformed, and gave up some relative value versus taxables over the course of the week. But really, we've been dominated by light trading volume, lack of interest, and people looking forward to the long weekend."

The municipal market was unchanged to slightly weaker Friday in light trading. On Monday, tax-exempt yields rose by two or three basis points, following the Treasury market.

Some weakness returned to the muni market Tuesday, and tax-exempts were weaker by a basis point or two, though activity remained muted. In the new-issue market, California's Palo Alto Unified School District competitively sold $289.2 million of general obligation bonds to Lehman Brothers.

On Wednesday, munis were unchanged to slightly weaker, following Treasuries. In the new-issue market, Merrill Lynch & Co. priced $462.5 million of state personal income tax revenue bonds for the New York State Thruway Authority, and Banc of America Securities LLC priced $342.7 million of water and sewer system revenue bonds for Charlotte, N.C.

Yesterday, tax-exempts were again unchanged to slightly weaker, in very light trading ahead of an abbreviated session today and the ensuing three-day weekend in observance of Labor Day.

The Bond Buyer 20-bond index of GO yields and the 11-bond index both increased four basis points this week to 4.68% and 4.58%, respectively. It was the highest level for the 20-bond index since Aug. 7, when it was 4.75%, and the highest for the 11-bond index since Aug. 14, when it was 4.58%.

The revenue bond index rose two basis points to 5.17%, which is the same level as two weeks ago.

The 10-year Treasury note yield fell six basis points to 3.77%, which is the lowest since May 12, when it was 3.75%. It was the fifth consecutive weekly decline in the 10-year note's yield.

The 30-year Treasury bond yield fell nine basis points to 4.37%, which is the lowest since April 10, when it was 4.32%. The 30-year bond's yield now has fallen five weeks in a row.

The Bond Buyer one-year note index fell one basis point to 1.58%, which is the lowest since July 23, when it was 1.57%.

The weekly average yield to maturity on The Bond Buyer 40-bond municipal bond index finished at 5.31%, up 0.03 basis points from last week's 5.28%.

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