After a string of substantial market rallies was halted Monday by an unchanged session, the municipal market was weaker yesterday.

Traders said tax-exempts were weaker by four or five basis points.

"The very long end is off as much as eight or so basis points. The market overall isn't down much more than five, but there is a lot of weakness out long," a trader in Los Angeles said. "It was bound to happen."

In economic data released yesterday, the consumer confidence index decreased in October, plummeting to an all-time low of 38.0 from an upwardly revised 61.4 last month. Economists polled by Thomson Reuters predicted the index would fall to 52.0.

The Treasury market showed losses yesterday as the stock market posted gains. The yield on the benchmark 10-year Treasury note, which opened at 3.69%, finished at 3.85%. The yield on the two-year note finished at 1.59%, after opening at 1.54%. And the yield on the 30-year bond, which opened at 4.04%, finished at 4.19%.

In addition, Federal Reserve policy-makers began the first day of their two-day scheduled meeting, with a decision on interest rates expected early this afternoon.

However, despite the weaker tone, a number of fairly sizeable deals hit the new-issue market yesterday.

Goldman, Sachs & Co. priced $314.5 million of public improvement refunding bonds for Houston. The bonds mature from 2012 through 2028 with term bonds in 2033 and 2038. Yields range from 3.51% with a 4% coupon in 2012 to 5.60% with a 5.375% coupon in 2038. The bonds, which are callable at par in 2018, are rated Aa3 by Moody's Investors Service and AA by Standard & Poor's.

Merrill Lynch & Co. priced $313.3 million of revenue and refunding bonds for the Michigan State Hospital Finance Authority. The bonds mature from 2014 through 2019, with term bonds in 2023, 2028, and 2033. Yields range from 5.25% with a 5% coupon in 2014 to 6.65% with a 6.5% coupon in 2033. The bonds, which are callable at par in 2018, are rated Aa2 by Moody's and AA by both Standard & Poor's and Fitch Ratings.

Goldman Sachs also priced $309.2 million of electric system revenue bonds for New York's Long Island Power Authority. The bonds mature from 2019 through 2025, with a term bond in 2033. Yields range from 5.27% with a 5.125% coupon in 2019 to 6.00% with a 5.75% coupon in 2033. Bonds maturing in 2033 were uninsured. All other bonds are insured by Assured Guaranty Corp. The underlying credit is rated A3 by Moody's and A-minus by Standard & Poor's and Fitch. The bonds are callable at par in 2019.

JPMorgan priced for retail investors $209.3 million of revenue refunding bonds for the New Jersey Educational Facilities Authority. The bonds mature from 2009 through 2023, with yields ranging from 2.61% with a 3.25% coupon in 2010 to 4.84% with a 4.75% coupon in 2023. The bonds, which are callable at par in 2018, are rated triple-A by both Moody's and Standard & Poor's.

Merrill Lynch priced $178.3 million of revenue and refunding bonds for the Idaho Health Facilities Authority. The bonds mature from 2014 through 2019, with term bonds in 2023, 2028, and 2033. Yields range from 4.95% with a 4.75% coupon in 2014 to 6.50% with a 6.25% coupon in 2033. The bonds, which are callable at par in 2018, are rated Aa2 by Moody's and AA by both Standard & Poor's and Fitch.

The Florida State Board of Education competitively sold $150 million of public education capital outlay bonds to Barclays Capital with a true interest cost of 5.41%. The bonds mature from 2009 through 2026, with term bonds in 2028, 2033, and 2038. Yields range from 2.70% with a 5% coupon in 2010 to 5.57% with a 5.5% coupon in 2038.

This marked the largest competitive deal to sell since the second week in September, when the market froze.

"That was better than I had expected given what people had been saying where it might come, which was 10-to-15 basis points behind that," said Ben Watkins, Florida's director of bond finance. "I'm hopeful that this is a catalyst to get some normalcy, some rationality back to the market because it has been very difficult."

Watkins said the pricing is higher than the state would have received in better times, but an improvement over prices received by similarly rated credits just two weeks ago. He also credited Barclays, which took over Lehman Brothers Inc.'s municipal bond trading desk in late September.

The Miami-Dade County School District competitively sold $100 million of tax anticipation notes to Citi, with a net interest cost of 1.705. The notes mature in April 2009, yielding 1.69% with a 3% coupon. The notes are rated MIG-1 by Moody's.

Suffolk County, N.Y., competitively sold $87.9 million of public improvement bonds to Prager Sealy & Co, with a NIC of 4.95%. The bonds mature from 2009 through 2028, with yields ranging from 2.00% with a 4.5% coupon in 2009 to 5.30% with a 5% coupon in 2028. Bonds maturing from 2014 through 2017 and in 2021 and 2022 were not formally re-offered. The bonds, which are callable at par in 2018, are rated Aa3 by Moody's, AA by Standard & Poor's, and AA-minus by Fitch.

Suffolk County also competitively sold $85 million of tax anticipation notes to Citi, with a NIC of 1.51%. The Tans mature in Sept. 2009, yielding 3.00% priced at par. The notes are rated MIG-1 by Moody's, SP-1-plus by Standard & Poor's, and F1-plus by Fitch.

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