The municipal market was slightly weaker yesterday, following the Treasury market.

Traders said tax-exempt yields were higher by about one basis point.

"It's probably a little bit weaker with Treasuries, but there's not a lot of trading going on," a trader in New York said. "It's still kind of new-issue focused."

"There's certainly a weaker tone in the market, but by the end of the day, we weren't off much at all, if anything," a trader in Los Angeles said. "I would have put it maybe three basis points weaker in the morning, but I think we're finishing up flat in spots to probably down a basis point in others."

The Treasury market showed losses yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.57%, finished at 3.62%. The yield on the two-year note was quoted near the end of the session at 2.20% after opening at 2.17%. The yield on the 30-year Treasury finished at 4.22% after opening at 4.17%.

In the new-issue market yesterday, Citi priced $950 million of general obligation bonds for New York City, in three series, following a three-day retail order period, which began Friday. Bonds from the $700 million series B mature from 2010 through 2026, with yields ranging from 2.25% with a 3% coupon in 2010 to 4.72% with a 5.25% coupon in 2026. The bonds are callable at par in 2018.

Bonds from the $237.8 million series C mature from 2010 through 2019, with yields ranging from 2.25% with a 5% coupon in 2010 to 4.19% with a 5.25% coupon in 2019. The bonds are also callable at par in 2018. And bonds from the $12.2 million series D mature from 2009 through 2013, with yields ranging from 1.70% with a 3% coupon in 2009 to 3.17% with a 4% coupon in 2013. The bonds are not callable. The credit is rated Aa3 by Moody's Investors Service, AA by Standard & Poor's, and AA-minus by Fitch Ratings.

New York City also yesterday competitively sold $90 million of taxable GO bonds to JPMorgan, with a true interest cost of 5.10%. The bonds mature in 2017 and 2018, and were not formally re-offered. The bonds are not callable.

In other activity, Citi priced $575.8 million of tax-exempt and taxable revenue bonds for Oklahoma's Grand River Dam Authority. Bonds from the $556.8 million tax-exempt series mature from 2014 through 2028, with term bonds in 2033. Yields range from 3.22% with a 3.2% coupon in 2014 to 4.84% with a 5% coupon in 2033. The bonds are insured by Berkshire Hathaway Assurance Corp. The underlying credit is rated A2 by Moody's and A by both Standard & Poor's and Fitch.

The New Jersey Educational Facilities Authority competitively sold $250 million of Princeton University revenue bonds to Wachovia Bank NA with a TIC of 4.39%. The bonds mature from 2010 through 2031, with term bonds in 2035 and 2038. Yields range from 2.24% with a 4% coupon in 2011 to 4.62% with a 4.5% coupon in 2035. Bonds maturing in 2010, from 2018 through 2020, in 2022, 2023, from 2027 through 2031, and in 2038 were not formally re-offered. The bonds, which are callable at par in 2018, are rated triple-A by all three major ratings agencies.

Morgan Stanley priced $214.7 million of revenue bonds for the District of Columbia in three series. Bonds from the $67.5 million series B mature in 2031 and are priced at par to yield 4.625%. The bonds are not callable. Bonds from the $73.6 million series C mature in 2034, and are priced at par to yield 5.125%. The bonds are callable at par in 2018. Bonds from the $73.6 million series D mature in 2036, and are priced at par to yield 5.375%. The bonds are also callable at par in 2018. The credit is rated A3 by Moody's and A-minus by Standard & Poor's.

Lehman Brothers priced $150 million of revenue refunding bonds for the Puerto Rico Public Buildings Authority. The bonds mature from 2023 through 2028, with yields ranging from 5.05% with a 6% coupon in 2023 to 5.20% with a 6% coupon in 2028. The bonds maturing from 2026 through 2028 are callable at par in 2018. The bonds are insured by MBIA Insurance Corp. The underlying credit is rated Baa3 by Moody's and BBB-minus by Standard & Poor's.

Oyster Bay, N.Y., competitively sold $99 million of bond anticipation notes to two bidders. Citi won the largest portion of the deal, worth $94 million, with a net interest cost of 1.62%. State Bank of Long Island won the remaining portion, worth $5 million, with a NIC of 1.61%. The Bans, which mature in September 2009, yield 2.75%, priced at par.

Merrill Lynch & Co. priced $70 million of housing revenue bonds for the Kentucky Housing Corp. in two series. Bonds from the $60 million series E mature from 2010 through 2018, with term bonds in 2023, 2028, 2033, and 2038. Yields range from 2.35% in 2010 to 5.45% in 2038, all priced at par. Bonds from the $10 million series F, which is subject to the alternative minimum tax, mature in 2037, yielding 5.25% with a 5.625% coupon. All the bonds are callable at par in 2018. The credit is rated triple-A by both Moody's and Standard & Poor's.

Florida's Volusia County School District competitively sold $35 million of tax anticipation notes to JPMorgan, with a NIC of 1.66%. The Tans mature in Sept. 2009, yielding 1.64% with a 3% coupon. The notes are rated MIG-1 by Moody's.

New York's Longwood Central School District competitively sold $33 million of tax anticipation notes to Commerce Capital Markets, with a NIC of 1.75%. The Tans mature in June 2009, yielding 3.00%, priced at par.

The economic calendar was light yesterday. However, later this week, a slate of economic data will be released. Today, import prices for August, initial jobless claims for the week ended Sept. 6, and continuing jobless claims for the week ended Aug. 30 will be released. And tomorrow, 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 1.7% decline in import prices, 440,000 initial jobless claims, 3.463 million continuing jobless claims, 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.

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