For the 10th consecutive session, yields in the tax-exempt market rose yesterday, as Utah sold $394.3 million of general obligation bonds in the primary.

Morgan Stanley priced the bonds for the state in the day's largest deal brought to institutional investors. The bonds mature from 2010 through 2024, with yields ranging from 0.85% with a 2% coupon in 2010 to 4.17% with a 5% coupon in 2024. The bonds, which are callable at par in 2018, are also rated triple-A by all three major ratings agencies.

For retail investors, JPMorgan priced $450.4 million of tax-exempt and taxable bonds for New York, ahead of institutional pricing tomorrow. Bonds from the tax-exempt $411.6 million Series A mature from 2010 through 2029, with term bonds in 2034 and 2039. Yields range from 1.87% with a 3% coupon in 2011 to 5.24% with a 5% coupon in 2034. Bonds maturing in 2010 will be decided via sealed bid. Bonds maturing in 2039 were not offered during the retail order period. The deal also contains a $38.8 million taxable Series B, which matures in 2019. The bonds were not offered during the retail order period. The credit is rated Aa3 by Moody's Investors Service, AA by Standard & Poor's, and AA-minus by Fitch Ratings.

Merrill Lynch & Co. concluded its three-day retail order period on Maryland GO bonds. A little more than $291 million were sold during its three-day retail order period that began Friday. Pricing information was unavailable by press time. The negotiated offering was slated to be priced in two series - the larger of which is Series A bonds that will mature serially from 2012 to 2024, as well as a Series B refunding component that includes maturities in 2010, 2011, and 2012 only.

"We were very, very pleased with the results," said Maryland deputy treasurer Howard Freedlander. "The market is a difficult one and the decision was made to close [the retail-order period] off in light of what was going on in the market."

Freedlander said the state will come back to market today with a competitive sale of $199 million of GOs, some of which were originally slated to be sold in the negotiated deal. The series C competitive deal is slated to mature from 2012 through 2023.

In the secondary, traders said tax-exempt yields were higher by about three basis points.

"We're a little softer again, but the new-issue market is what is driving it," a trader in New York said. "That's what you've got to look at. You really can't put much stock in offerings in the secondary, because the primary seems to be cheaper. We're down a couple of basis points in the longer serial sector, and nobody can get arrested in the front end. Nobody wants that [paper], with good reason."

"There's not much to speak of in the secondary market," a trader in Los Angeles said. "We're seeing a bit of trading activity, but not a whole lot. But we're down a good couple basis points again."

The Treasury market showed losses yesterday. The yield on the benchmark 10-year Treasury note, which opened at 2.86%, was quoted near the end of the session at 2.91%. The yield on the two-year note was quoted near the end of the session at 0.90% after opening at 0.86%. The yield on the 30-year bond, which opened at 3.61%, was quoted near the end of the session at 3.62%.

As of Monday's close, 10-year tax-exempt bonds were trading at 107.6% of comparable Treasuries, according to Municipal Market Data. Additionally, 30-year munis were trading at 133.3% of comparable Treasuries. Also, as of the close Monday, 30-year tax-exempt triple-A rated general obligation bonds were trading at 143.6% of the comparable London Interbank Offered Rate.

In other new-issue market activity, Merrill Lynch priced $74.5 million of surface transportation improvements special obligation notes for West Virginia. The notes mature from 2009 through 2015, with yields ranging from 1.62% with a 4% coupon in 2010 to 3.30% with a 5% coupon in 2015. Bonds maturing in 2009 will be decided via sealed bid. The notes, which are not callable, are rated Aa3 by Moody's and AA-minus by Standard & Poor's.

Siebert Brandford Shank & Co. priced $60 million of school facilities construction and improvement bond anticipation notes for Ohio's Columbus City School District. The Bans mature in December 2009, yielding 0.70% with a 1.5% coupon. The short-term debt is rated SP-1-plus by Standard & Poor's. The overall credit is rated AA by Standard & Poor's.

The Las Vegas-Clark County Library District competitively sold $50 million of GO limited tax medium-term bonds to JPMorgan with a true interest cost of 3.91%. The bonds mature from 2012 through 2019, with yields ranging from 2.62% with a 3% coupon in 2012 to 4.27% with a 5% coupon in 2019. The bonds, which are not callable, are rated Aa3 by Moody's and AA by Standard & Poor's.

The economic calendar was light yesterday. However, later this week, more economic data will be released, most prominently February non-farm payrolls and the unemployment report, which are released Friday. Tomorrow, the ISM non-manufacturing index for February will be released, followed Thursday by initial jobless claims for the week ended Feb. 28, continuing jobless claims for the week ended Feb. 21, final fourth-quarter non-farm productivity and unit labor costs, and January factory orders.

Economists polled by Thomson Reuters are predicting that 648,000 jobs were lost in February, along with a February unemployment rate of 7.9%. Also, they are predicting a 41.0 ISM non-manufacturing index, 650,000 initial jobless claims, 5.170 million continuing jobless claims, a 1.5% rise in productivity, a 3.4% climb in unit labor costs, a 3.5% drop in factory orders, and a 1.0% decline in factory orders excluding transportation.

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