Favorable indicators spur buying, push bond yields lower.

Yields on The Bond Buyer's weekly municipal bond indexes all fell this week, as investors, cheered by inflation figures and economic data, entered the market.

The yield on the 20-bond index of general obligation dropped 10 basis points, to 5.20% from 5.30% last Thursday. The 11-bond index also dropped 10 basis points, to 5.11% from 5.21%.

The 20-bond index is at the lowest level since Feb. 14, 1974, when it was at 5.18%, and the 11-bond index is at its lowest level since Feb. 21, 1974, when it was 5.09%.

The 30-year revenue bond index fell 11 basis points this week, to 5.41 % from 5.52% last week.

The average yield to maturity of the 40 bonds used to calculate the daily Municipal Bond Index fell six basis points, to 5.37% from 5.43% a week ago.

The revenue bond and the average yield to maturity of the 40 bonds used to calculate the bond index both reached new all-time lows.

Declining yields in the government market outpaced municipals this week, with the long Treasury bond dropping 16 basis points, to 5.84%.

Market players said this week's inflation figures helped push fixed income yields lower.

Yesterday, the producer price index for September was released, showing a 0.2% rise. The increase was in line with expectations, but more encouraging was the flat reading on core PPI, which excludes food and energy costs.

The Bond Buyer's 30-day visible supply dropped $1.7 billion Thursday to $4.43 billion from Wednesday's $6.13 billion. That is the measure of upcoming issuance's lowest level since Sept. 23, when it was $4.39 billion.

Standard & Poor's Corp.'s The Blue List had posted six consecutive days of declines dating from Oct. 5, when it was $2.01 billion, to Wednesday, Oct. 13 when it was $1.64 billion. Yesterday, it edged $55.5 million higher to $1.7 billion.

The Blue List has not been under $1.5 billion since Sept. 20, when it measured $1.498 billion.

The competitive component of the 30-day visible supply has not been under $2 billion since Sept. 30 when it was $1.84 billion and it has been accounting for a greater share of total forward supply.

The competitive component accounted for 45% of October's daily average supply, up from 39% in August and September and 30% for the January-July period.

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