The municipal market was mixed Friday heading into a three-day weekend, reflecting short-end gains and long-end losses.

“We’re seeing some divergence between the long bonds and short bonds,” a trader in New York said. “We’re up maybe two or three on the short end, but we’re down, I’d say, one to two out past 15 years.”

Trading activity reported by the Municipal Securities Rulemaking Board was light Friday.

The Treasury market was mixed. The yield on the benchmark 10-year Treasury note, which opened at 3.62%, finished at 3.63%. The yield on the two-year note was quoted near the end of the session at 2.35% after opening at 2.41%.

In economic data released Friday, the University of Michigan’s preliminary January consumer sentiment index reading was 80.5 compared to the final December reading of 75.5 and the 74.5 reading earlier in December.

Economists polled by IFR Markets had predicted a 74.7 reading for the index.

The composite index of leading economic indicators fell 0.2% in December. LEI decreased an unrevised 0.4% in November. Economists polled by IFR Markets predicted LEI would be down 0.1% in the month.

The economic calendar will be light. On Thursday, initial jobless claims for the week ended Jan. 19 will be released, along with continuing jobless claims for the week ended Jan. 12, and December existing home sales. No other major economic data will be released this week.

Economists polled by IFR Markets are predicting 321,000 initial jobless claims, 2.700 million continuing jobless claims, and 4.95 million existing home sales.

However, next week will see a significantly larger economic calendar, including the January non-farm payrolls report, which will be released on Friday, Feb. 1. Economists polled by IFR Markets are predicting that 70,000 new jobs were created in January.

In the new-issue market Friday, Newark, N.J., competitively sold $98.6 million of notes in three series. The largest series, $66.6 million — $61 million of general anticipation bond anticipation notes and $5.6 million of water utility Bans — was sold to Commerce Capital Markets, with a net interest cost of 2.46%. The Bans mature in Jan. 2009, yielding 3% at par.

The second largest series, $29.9 million of school promissory notes, was sold to Commerce, with an NIC of 2.46%. The notes mature in Jan. 2009, yielding 3% at par. And the smallest series, $2 million of special emergency notes, was sold to Janney Montgomery Scott LLC with a NIC of 4.33%. The notes mature in Jan. 2009, yielding 4.35% at par. All the notes are rated MIG-1 by Moody’s Investors Service and are not callable.

Bourne, Mass., competitively sold $9.1 million of GO Bans to Eastern Bank Corp. with an NIC of 2.50%. The Bans mature in January 2009, yielding 3% at par. The notes, which are not callable, are rated MIG-1 by Moody’s.

RBC Capital Markets priced $8.1 million of education revenue bonds for the Danbury, Conn., Higher Education Finance Corp. in two series. The larger series, $7.5 million, matures in 2038, yielding 6.50% at par. The smaller series, $600,000 is taxable, maturing in 2018. The credit is rated BB-plus by Standard & Poor’s.

RBC also priced $5.2 million of sewer revenue bonds for Pennsylvania’s Suburban Lancaster Sewer Authority. The bonds mature from 2008 through 2021, with yields ranging from 2.80% at par in 2008 to 3.45% with a 3.4% coupon in 2017. Bonds maturing from 2018 through 2021 were not formally re-offered. The bonds, which are callable at par in 2013, are insured by Financial Security Assurance Inc. The underlying credit is rated A-minus by Standard & Poor’s.

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