The municipal market was slightly firmer yesterday after a one-day pause in observance of Veteran's Day. Traders said tax-exempt yields were lower by three or four basis points.

"It's somewhat quiet. We're seeing a few orders, but being a half week this week, people are slow to get started," a trader in New York said. "There's a bunch of bid-wanteds out there, not quite as bad as what we were used to seeing a couple weeks ago, but a little more than usual. But overall, it's fairly quiet."

"People are buying bonds in anticipation of taxes going through the roof, regardless of what income you earn, so municipals are going to be a hot product in the weeks and months to come," the trader said. "I would imagine people are buying in relation to that now. We're probably a little more expensive, only because there's not a lot of people around, so you're pretty much going to be looking for the bottom of the barrel [paper] right now."

Trades reported by the Municipal Securities Rulemaking Board yesterday showed gains. A dealer sold to a customer California 5.2s of 2026 at 5.36%, down three basis points from where they were sold Monday. A dealer sold to a customer Puerto Rico Electric Power Authority 5.5s of 2038 at 6.50%, two basis points lower than where they traded Monday. A dealer sold to a customer Oregon 4.5s of 2032 at 5.40%, four basis points lower than where they traded Monday.

Bonds from an interdealer trade of Nevada 5s of 2027 yielded 5.15%, down three basis points from where they were sold Monday. Bonds from an interdealer trade of Dormitory Authority of the State of New York 5.5s of 2027 at 5.15%, down two basis points from where they traded Monday. A dealer bought from a customer insured Massachusetts Water Resources Authority 5.25s of 2032 at 5.32%, four basis points lower than where they traded Monday.

"There wasn't a slew of activity, but business was getting done, and we're a little better," a trader in Los Angeles said. "I'd say we're better a solid three basis points."

The Treasury market showed some gains. The yield on the benchmark 10-year Treasury note, which opened at 3.74%, finished at 3.65%. The yield on the two-year note was quoted near the end of the session at 1.15% after opening at 1.24%. And the yield on the 30-year bond, which opened at 4.19%, was quoted near the end of the session at 4.17%.

In the new-issue market yesterday, JPMorgan priced $100 million of homeowner mortgage revenue bonds for the Florida Housing Finance Corp. The bonds mature from 2010 through 2020, with term bonds in 2023, 2028, 2033, and 2038. Yields range from 3.50% in 2010 to 6.25% in 2038, all priced at par. The bonds, which are callable at par in 2018, are rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's and Fitch Ratings.

JPMorgan priced $78.7 million of bulk power supply system revenue bonds for the Jacksonville Electric Authority. The bonds mature from 2012 through 2028, with term bonds in 2033 and 2038. Yields range from 3.30% with a 4% coupon in 2012 to 5.86% with a 5.75% coupon in 2038. The bonds, which are callable at par in 2014, are rated Aa2 by Moody's and AA-minus by both Standard & Poor's and Fitch.

Merrill Lynch & Co. priced $50 million of homeownership mortgage bonds for the South Dakota Housing Development Authority. The bonds mature from 2010 through 2018, with term bonds in 2023, 2028, 2033, and 2038. Yields range from 3.45% in 2010 to 6.25% in 2038, all priced at par. The bonds, which are callable at par in 2018, are rated Aa1 by Moody's and AAA by Standard & Poor's.

Raymond James & Co. priced $40.2 million of governmental loan revenue bonds for the Monmouth County, N.J., Improvement Authority. The bonds, which are rated triple-A by all three major rating agencies, mature from 2009 through 2026, with a term bond in 2028. Yields range from 2.32% with a 4% coupon in 2010 to 5.05% with a 5% coupon in 2028. Bonds maturing in 2009 were decided via sealed bid. The bonds are callable at par in 2018.

Today, the two largest deals of the week are slated to come to market, a $750 million New Jersey Transportation Trust Fund Authority sale of transportation system bonds, and a $659 million DASNY personal income tax revenue bond deal. Merrill Lynch is slated to price both transactions.

The economic calendar was light yesterday. However, today, initial jobless claims for the week ended Nov. 8 and continuing jobless claims for the week ended Nov. 1 will be released. Tomorrow, October import prices and October retail sales will be released, along with the preliminary November University of Michigan consumer sentiment index, and September business inventories and sales.

Economists polled by Thomson Reuters are predicting 482,000 initial jobless claims, 3.850 million continuing jobless claims, a 4.2% drop in import prices, a 1.9% dip in retail sales, a 1.0% decline in retail sales excluding autos, a 56.0 University of Michigan sentiment index, and no change in business inventories.

However, next week, a larger slate of economic data will be released, starting Monday with October industrial production and capacity utilization. On Tuesday, the October producer price index will be released, followed by the consumer price index, housing starts, and building permits Wednesday. On Thursday, initial jobless claims for the week ended Nov. 15 will be released, along with continuing jobless claims for the week ended Nov. 8, and the October index of leading economic indicators.

Economists polled by Thomson are predicting a 0.5% dip in industrial production, 76.1% capacity utilization, a 1.0% decline in PPI, a 0.2% rise in PPI core, a 0.4% drop in CPI, a 0.2% uptick in core CPI, 800,000 housing starts, and 783,000 building permits. They are not yet projecting next week's initial jobless claims and continuing jobless claims.

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