The municipal market was again unchanged to slightly firmer yesterday. Traders said tax-exempt yields were flat to lower by one or two basis points.

"There's a firmer tone, but we're still somewhat flat," a trader in New York said. "We're not a whole lot different than we were yesterday. Maybe a basis point or two better in spots, but somewhat unchanged on the whole."

Trades reported by the Municipal Securities Rulemaking Board yesterday showed some gains. Bonds from an interdealer trade of California's Bay Area Toll Authority 5s of 2039 yielded 5.15%, one basis point lower than where they traded Tuesday. A dealer bought from a customer New York City Transitional Finance Authority 5s of 2023 at 4.18%, down two basis points from where they were sold Tuesday. A dealer sold to a customer insured Harris County, Tex., 4.75s of 2032 at 5.11%, even with where they traded yesterday.

"It was pretty quiet out there," a trader in Los Angeles said. "We're a bit better, in spots, but overall, I wouldn't say the scale really moved much. A couple of basis points, if anything, out long probably, we're more flat than anything else, I'd say."

The Treasury market mostly showed gains yesterday, while posting mild losses on the short end. The yield on the benchmark 10-year Treasury note, which opened at 2.82%, was quoted near the end of the session at 2.77%. The yield on the two-year note was quoted near the end of the session at 0.93% after opening at 0.90%. The yield on the 30-year bond, which opened at 3.49%, was quoted near the end of the session at 3.45%.

The Treasury Department auctioned $21 billion of 10-years with a 2 3/4% coupon at a 2.818% high yield, a price of about 99.4. The bid-to-cover ratio was 2.21. Federal Reserve banks bought $1.06 billion for their own account in exchange for maturing securities.

In the new-issue market yesterday, JPMorgan priced $248.9 million of revenue bonds for the North Carolina Capital Facilities Finance Agency. The bonds mature in 2038, yielding 4.75% with a 5% coupon. The bonds, which are callable at par in 2019, are rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's.

Wachovia Bank NA priced $244 million of general obligation refunding bonds for Mecklenburg County, N.C. The bonds mature from 2011 through 2020, with yields ranging from 1.18% with a 4% coupon in 2011 to 3.13% with a 5% coupon in 2020. The bonds, which are not callable, are rated triple-A by all three major ratings agencies.

Barclays Capital priced $150 million of general revenue mandatory tender bonds for New York's Triborough Bridge and Tunnel Authority. The bonds with a mandatory tender on Jan 20, 2010, yield 0.65% with a 2% coupon. The bonds, are rated VMIG-1 by Moody's, A-1-plus by Standard & Poor's, and F1-plus by Fitch Ratings.

JPMorgan priced $71.9 million of water revenue refunding and improvement bonds for Texas' Tarrant Regional Water District. The bonds mature from 2011 through 2029, with yields ranging from 1.67% with a 5% coupon in 2011 to 4.89% with a 5% coupon in 2029. The bonds, which are callable at par in 2019, are rated A1 by Moody's, AAA by Standard & Poor's, and AA by Fitch.

Williamson County, Tenn., competitively sold $50.1 million of bonds to BB&T Capital Markets in two series. Bonds from the $26.5 million series of GO bonds, which were sold at a TIC of 3.82%, mature from 2011 through 2029, with yields ranging from 1.22% with a 2.5% coupon in 2011 to 4.55% with a 4.4% coupon in 2029. Bonds maturing from 2013 through 2015 and from 2021 through 2025 were not formally re-offered. Bonds from the $23.7 million series of county district school refunding and improvement bonds, which were sold at a TIC of 3.83%, mature from 2011 through 2029, with yields ranging from 1.22% with a 2.5% coupon in 2011 to 4.55% with a 4.4% coupon in 2029. Bonds maturing from 2013 through 2015 and from 2021 through 2024 were not formally re-offered. All bonds, which are callable at par in 2019, are rated triple-A by Moody's.

Des Moines competitively sold $31.6 million of GO refunding bonds to Robert W. Baird & Co. with a TIC of 2.29%. The bonds mature from 2010 through 2019, with yields ranging from 1.41% with a 2% coupon in 2012 to 3.10% with a 3.25% coupon in 2019. The bonds, which are callable at par in 2017, are rated Aa2 by Moody's and AAA by Standard & Poor's.

Lyndhurst Township, N.J., competitively sold $26.8 million of general bond anticipation notes to TD Securities, with a net interest cost of 2.98%. The Bans mature in 2010, with a 3.5% coupon, and are not formally re-offered.

The economic calendar was light yesterday. However, a slate of additional economic data will be released toward the end of the week. Today, initial jobless claims for the week ended Feb. 7 and continuing jobless claims for the week ended Jan. 31 are due, along with January retail sales and December business inventories. Tomorrow, the preliminary February University of Michigan consumer sentiment index will be released.

Economists polled by Thomson Reuters are predicting 610,000 initial jobless claims, 4.800 million continuing jobless claims, an 0.8% dip in retail sales, a 0.5% drop in retail sales excluding autos, an 0.8% decline in business inventories, and a 61.0 Michigan sentiment reading.

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