The municipal market was slightly firmer yesterday, following Treasuries. Traders said tax-exempt yields were lower by about two basis points.

"It's extremely quiet, but we're following Treasuries a bit, so there's some high-grade trades taking place up a basis point or two," a trader in New York said. "It also looks like people are more curious in the short end. It's only two weeks into September, but people are already talking about their books for the quarter end."

Trades reported by the Municipal Securities Rulemaking Board yesterday showed gains. A dealer sold to a customer Ohio Higher Educational Facility Commission 5.25s of 2033 at 5.34%, down three basis points from where they traded yesterday. Bonds from an interdealer trade of Berkshire Hathaway Assurance Corp.-backed Bexar County, Tex., 5s of 2037 yielded 5.07%, two basis points lower than where they were sold Wednesday. A dealer sold to a customer Assured Guaranty Corp.-backed Massachusetts Education Finance Authority 6.35s of 2030 at 6.21%, three basis points lower than where they were sold Wednesday. Bonds from an interdealer trade of North Texas Tollway Authority 5.75s of 2038 yielded 5.89%, down three basis points from where they traded Wednesday.

"There are crickets. It's very quiet," a trader in Chicago said. "It's a little firmer in spots, but it's kind of bouncing around a bit like Treasuries. Maybe we're up one or two, but it's very quiet."

The Treasury market showed some gains yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.63%, finished at 3.62%. The yield on the two-year note was quoted near the end of the session at 2.18% after opening at 2.20%. The yield on the 30-year Treasury finished at 4.21% after opening at 4.22%.

In economic data released yesterday, import prices dropped 3.7% in August, after a revised 0.2% rise the previous month. Economists polled by IFR Markets had predicted a 1.7% decline.

Initial jobless claims for the week ended Sept. 6 came in at 445,000, after a revised 451,000 the previous week. Economists polled by IFR had predicted 440,000 initial jobless claims.

Continuing jobless claims for the week ended Aug. 30 came in at 3.525 million after a revised 3.403 million the previous week. Economists polled by IFR had predicted 3.463 million continuing jobless claims.

Today, August retail sales, the August producer price index, the preliminary September University of Michigan consumer sentiment index, and July business inventories and sales will all be released. Economists polled by IFR Markets are predicting a 0.3% increase in retail sales, a 0.2% drop in retail sales excluding autos, a 0.5% decrease in PPI, a 0.2% uptick in PPI core, a 64.0 reading for the University of Michigan sentiment index, a 0.5% increase in business inventories, and a 1.4% climb in business sales.

In the new-issue market yesterday, the Florida Department of Environmental Protection competitively sold $156.7 million of Florida Forever revenue bonds to Merrill Lynch & Co., with a true interest cost of 4.65%. The bonds mature from 2009 through 2028, with coupons ranging from 3.5% in 2009 to 5% in 2028. None of the bonds were formally re-offered. The bonds, which are callable at 101 in 2018, declining to par in 2019, are rated A1 by Moody's Investors Service, AA-minus by Standard & Poor's, and A-plus by Fitch Ratings.

Citi priced $106.5 million of hospital revenue bonds for Florida's Halifax Hospital Medical Center in two series. Bonds from the $70.9 million Series B-1 mature in 2038, yielding 5.62% with a 5.5% coupon. Bonds from the $35.6 million Series B-2 mature in 2031, yielding 5.53% with a 5.375% coupon. The bonds, which are callable at par in 2018, are insured by Financial Security Assurance Inc. The underlying credit is rated BBB-plus by Standard & Poor's and Fitch.

Merrill Lynch also priced $73.6 million of infrastructure sales surtax revenue bonds for Sarasota County, Fla. The bonds mature from 2010 through 2024, with yields ranging from 2.40% with a 3% coupon in 2010 to 4.57% with a 4.375% coupon in 2023. The bonds, which are callable at par in 2018, are rated Aa3 by Moody's and AA by Standard & Poor's and Fitch.

Citi priced $72.7 million of revenue bonds for Florida's Jacksonville Electric Authority in two series. Bonds from the larger $54.1 million series mature from 2009 through 2028, with yields ranging from 2.00% with a 3% coupon in 2009 to 4.90% with a 4.75% coupon in 2028. The bonds are callable at par in 2013, except those bonds maturing in 2014 and 2015, which are not callable. Bonds from the smaller $18.6 million series mature from 2009 through 2028, with yields ranging from 2.15% with a 3% coupon in 2009 to 4.99% with a 4.75% coupon in 2028. These bonds are callable at par in 2013. The bonds are rated Aa2 by Moody's and AA-minus by both Standard & Poor's and Fitch.

California's El Dorado Union High School District competitively sold $34 million of general obligation bonds to UBS Securities LLC with a TIC of 4.69%. The bonds mature from 2009 through 2033, with coupons ranging from 8% in 2009 to 4.75% in 2033. None of the bonds were formally re-offered. The bonds, which are callable at par in 2018, are insured by FSA.

Finally, Gloucester, Mass., competitively sold $33.1 million of bond anticipation notes to Banc of America Securities LLC with a net interest cost of 1.83%. The Bans mature in Sept. 2009, yielding 2.75%, priced at par. The notes are rated MIG-1 by Moody's.

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