Most of The Bond Buyer's weekly yield indexes pushed higher this week, as tax-exempts grew weaker in all the week's sessions despite light to moderate activity and Treasury market gains.

"It's a fairly tough market," said Howard Mackey, president of the broker-dealer business unit of Rice Financial Products. "It kind of reminds me of where things were some months ago, when bids pretty much dried up in the marketplace. You're seeing that now there's very little bidding activity that's going on, and I think just about all of the new issues that have come to market have had some struggles. And we're still seeing balances outstanding in deals that have come over the past week or so."

Mackey also said that he thinks "as far as the muni market is concerned, we have that issue of a disconnect again."

"At some point, high grades really started to come back and do very well, and very high-quality paper is still going to do okay and you'll get a bid, particularly within 10 to 12 years, but longer paper is going to have more difficulty," he said. "Weaker names will have more difficulty, so if you don't have a solid double-A credit, you're going to have a tough time in the market. At this point, even bonds insured by Berkshire Hathaway [Assurance] are not commanding what we would normally expect to see in terms of liquidity with that type of insurance.

"Everybody's just very concerned about the ability of insurers to maintain enough solvency or liquidity to maintain ratings," Mackey said. "And with the recent downgrades with [Financial Security Assurance Inc.] and Assured Guaranty, you're seeing a detrimental effect on some deals that were priced this week, and that kind of thing is obviously having an effect on people that are major holders of bonds with that insurance."

The municipal market was unchanged to slightly weaker Friday, following Treasuries. Traders said tax-exempt yields were unchanged to higher by three or four basis points in spots.

On Monday, the tax-exempt market was weaker by three or four basis points, following Treasuries, which fell due to increased supply from a $36 billion auction of two-year notes and stock market gains on news of Citigroup's planned $20 billion bailout.

Yesterday, munis were weaker by about four basis points, despite Treasury market gains, as investors moved to Treasuries in the wake of the Federal Reserve Board's plan to purchase as much as $600 billion of mortgage securities.

The Bond Buyer 20-bond index of GO yields rose 26 basis points this week to 5.39%. This is the highest level for the index since Oct. 16, when it was 6.01%.

The 11-bond index of higher-grade 20-year GO yields rose 18 basis points this week to 5.21%. This is the highest level for the index since Oct. 30, when it was 5.24%.

The revenue bond index of 30-year revenue bond yields rose eight basis points this week to 6.06%. This is the highest level for the index since Oct. 30, when it was 6.09%.

The 10-year Treasury note yield fell two basis points this week to 3.09%. This is the lowest level for the note's yield since mid-1956.

The 30-year Treasury bond yield fell three basis points this week to its second consecutive all-time low of 3.62%.

The Bond Buyer one-year note index of tax-exempt yields fell nine basis points this week to 1.20%. This is the lowest level for the index since Feb. 13, when it was 1.02%. The index has fallen 149 basis points since Oct. 15.

The weekly average yield to maturity on The Bond Buyer 40-bond municipal bond index finished at 6.08%, up 16 basis points from last week's 5.92%.

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