The municipal market was largely unchanged yesterday. Traders said tax-exempts yields were lower by up to two or three basis points in bonds maturing within two years, but the remainder of the curve was fairly flat.

"There wasn't much happening through most of the curve," a trader in Los Angeles said. "We saw some gains on the very, very short end, but that was it, for the most part."

Trades reported by the Municipal Securities Rulemaking Board yesterday showed little movement. Bonds from an interdealer trade of insured Pennsylvania Center Area School District 4.25s of 2030 yielded 4.27%, even with where they priced Tuesday. Bonds from an interdealer trade of insured New Jersey Transportation Trust Fund Authority 5s of 2032 yielded 4.51%, even with where they were sold Tuesday. Bonds from an interdealer trade of California 5s of 2037 yielded 4.87%, even with where they traded Tuesday. Bonds from an interdealer trade of insured Massachusetts Health and Educational Facilities Authority 5s of 2026 yielded 4.36%, even with where they were sold Tuesday.

"It's pretty quiet. It looks like everybody who marked their bonds because of the rally [Tuesday] has kind of come off their bonds a little bit [yesterday]," a trader in New York said.

The Treasury market showed mild losses yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.58%, finished at 3.59%. The yield on the two-year note was quoted near the end of the session at 1.94%, after opening at 1.92%.

In economic data released yesterday, preliminary fourth-quarter non-farm productivity came in at 1.8%, after a revised 6.0% the previous quarter. Additionally, preliminary fourth-quarter unit labor costs came in at 2.1% after a revised 1.9% drop the prior quarter. Economists polled by IFR Markets had predicted a 0.5% uptick in productivity, and a 3.0% rise in unit labor costs.

The Bond Buyer's one-year note index fell 62 basis points this week to 1.27%. This is the lowest figure for the index since April 28, 2004, when it was also 1.27%. The 62-basis-point decline is the fourth largest on record, replacing the 49-basis-point decrease two weeks ago, and the largest since a 65-basis-point drop on Feb. 6, 1991. The index has fallen 130 basis points in the past three weeks, from 2.57% on Jan. 16, 2008. This is the largest three-week decline on record for the index, which began in July 1989.

In the new-issue market yesterday, the Florida State Board of Education competitively sold $300 million of public education capital outlay bonds to Goldman, Sachs & Co. with a true interest cost of 4.43%. The bonds mature from 2008 through 2037, with term bonds in 2034 and 2037. Yields range from 2.40% with a 3% coupon in 2011 to 3.84% with a 5% coupon in 2021. Bonds maturing from 2008 through 2010, and from 2022 through 2037 were not formally re-offered. The bonds are callable at 101 in 2017, declining to par in 2018. The credit is rated Aa1 by Moody's Investors Service, AAA by Standard & Poor's, and AA-plus by Fitch Ratings.

Utah's Weber School District Board of Education competitively sold $33 million of general obligation school building bonds to Robert W. Baird & Co. The bonds mature from 2008 through 2028, with yields ranging from 1.80% with a 3.125% coupon in 2009 to 3.01% with a 3.25% coupon in 2015. Bonds maturing in 2008, and from 2016 through 2028 were not formally re-offered. The bonds, which are callable at par in 2018, are rated A1 by Moody's.

Prince George County, Va., competitively sold $30 million of GO bonds and notes. The county sold $17.7 million of GO public improvement bonds to Davenport & Co. with a TIC of 4.20%. The bonds mature from 2009 through 2029, with term bonds in 2033 and 2038. Yields range from 2.00% with a 3.25% coupon in 2009 to 4.38% with a 4.25% coupon in 2038.

The bonds, which are callable at par in 2018, are insured by Assured Guaranty Corp. The underlying credit is rated A1 by Moody's and A-plus by Fitch. The county also sold $12.4 million of GO revenue anticipation notes to Sovereign Securities with a TIC of 3.06%. The Rans mature in 2011, yielding 2.75% with a 3% coupon. The Rans are callable at par in 2009.

Raymond James & Associates priced $21.5 million of refunding bonds for Michigan's Lincoln Park School District. The bonds mature from 2009 through 2015, and from 2021 through 2025. Yields range from 2.07% with a 5% coupon in 2009 to 4.48% with a 4.25% coupon in 2025. The bonds, which are callable at par in 2018, are insured by Financial Security Assurance Inc.

Vernon, Conn., competitively sold $21 million of GOs to Citi with a TIC of 3.95%. The bonds mature from 2011 through 2028, with yields ranging from 2.30% with a 5.5% coupon in 2011 to 4.20% with a 4.125% coupon in 2028. The bonds, which are callable at par in 2017, are insured by FSA.

Banc of America Securities LLC priced $17.5 million of subordinate gross receipts tax revenue bonds for San Juan County, N.M. The bonds mature from 2009 through 2027, with yields ranging from 2.00% with a 3% coupon in 2009 to 4.50% with a 4.375% coupon in 2027. The bonds, which are callable at par in 2017, are insured by FSA. The underlying credit is rated A1 by Moody's and A-plus by Standard & Poor's. q

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