The municipal market was weaker yesterday, following the Treasury market, which has seen yields rise some.

"I'd say three or four basis points weaker, mostly on the uncertainty in the auction-rate market," a trader in New York said. "It's hard to get a bid right now. Brokers are really desperate on their bid-wanteds."

"We're seeing a bit of weakness, much more so on the long end than the short," another trader in New York said. "It could be as much as four or five basis points weaker even on the really long end, but within 10 years or so, there's very little movement, a basis point cheaper if anything."

Trades reported by the Municipal Securities Rulemaking Board yesterday showed some losses. Bonds from an interdealer trade of insured Florida State Board of Education 4.5s of 2036 yielded 4.73%, up four basis points from where they were traded Wednesday. Bonds from an interdealer trade of New York 4.375s of 2027 yielded 4.61%, three basis points higher than where they were sold Wednesday. A dealer sold to a customer Illinois Housing Development Authority 5.2s of 2039 at 5.34%, up four basis points from where they traded Wednesday.

"We had some sellers in here that just bombed the shorter part of curve," a broker's broker in Los Angeles said. "We see the market getting cheaper, and we like it. We don't have a lot of execution getting done, because the offered side just isn't ready to take those kind of hits, but it's cheaper and it's going to get cheaper."

The Treasury market showed losses yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.73%, finished at 3.85%. The yield on the two-year note was quoted near the end of the session at 1.92%, after opening at 1.91%.

In economic data released yesterday, initial jobless claims came in at 348,000 for the week ended Feb. 9, after a revised 357,000 the previous week. Additionally, continuing jobless claims for the week ended Feb. 2 came in at 2.761 million, after a revised 2.770 million the previous week.

Economists polled by IFR Markets had predicted 343,000 initial jobless claims and 2.780 million continuing jobless claims.

In the new-issue market yesterday, Morgan Stanley priced $90.9 million of general receipt bonds for Ohio's University of Akron. The bonds mature from 2011 through 2030, with term bonds in 2033 and 2038. Yields range from 2.35% with a 3% coupon in 2011 to 4.66% with a 5% coupon in 2038. Bonds maturing from 2011 through 2015 are insured by Assured Guaranty Corp. Bonds maturing from 2016 through 2038 are insured by Financial Security Assurance Inc. The bonds are callable at par in 2018. The underlying credit is rated A2 by Moody's Investors Service.

Atlantic City, N.J., competitively sold $26.5 million of general obligation general improvement bonds to Sovereign Securities with a net interest cost of 4.40%. The bonds mature from 2009 through 2018, with yields ranging from 1.70% with a 2.25% coupon in 2009 to 4.40% with a 5.5% coupon in 2018. The bonds, which are not callable, are rated Baa1 by Moody's.

Lehman Brothers priced $25 million of single-family housing revenue bonds subject to the alternative minimum tax for the Nebraska Investment Finance Authority. The bonds mature from 2009 through 2018, with term bonds in 2028 and 2039. Yields range from 2.60% in 2009 to 5.50% in 2039, all priced at par. The credit is rated AAA by Standard & Poor's.

Lexington, Mass., competitively sold $24.1 million of GO municipal purpose loan bonds to UBS Securities LLC with a true interest cost of 3.75%. The bonds mature from 2009 through 2028, with yields ranging from 1.80% with a 3.5% coupon in 2009 to 4.30% with a 4.25% coupon in 2028. The bonds, which are callable at par in 2018, are rated Aaa by Moody's.

Huber Heights, Ohio, competitively sold $11 million of various-purpose GO bonds to Fifth Third Securities with a NIC of 4.15%. The bonds mature from 2009 through 2028, with yields ranging from 1.60% with a 2.5% coupon in 2009 to 4.50% with a 4.375% coupon in 2028. The bonds, which are callable at par in 2018, are insured by FSA. The underlying credit is rated Aa3 by Moody's.

January import prices will be released today, alongside January export prices, January industrial production, January capacity utilization, and the preliminary February University of Michigan consumer sentiment index.

Economists polled by IFR Markets are predicting a 0.5% increase in import prices, a 0.1% uptick in industrial production, 81.4% capacity utilization, and a 77.0 Michigan sentiment reading.

Next week will be shortened due to the President's Day holiday. On Wednesday, the January consumer price index will be released, in addition to the January CPI core, January housing starts, and January building permits. Then, next Thursday, initial jobless claims for the week ended Feb. 16 will be released, along with continuing jobless claims for the week ended Feb. 9, and the January composite index of leading economic indicators.

Economists polled by IFR are predicting a 0.3% rise in CPI, a 0.2% gain in CPI core, 996,000 housing starts, 1.040 million building permits, 340,000 initial claims, 2.760 million continuing claims, and a 0.1% dip in LEI. q

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