Flurry in futures just can't begin to cover over gray landscape.

Futures prices yesterday recouped some of the big losses suffered over the past two weeks, but traders said the tone remained heavy.

The December municipal futures contract settled up 14/32 at 101.23, just off the high of 101.26, thanks mostly to short-covering, traders said. The MOB spread widened to negative 461 from negative 452 on Friday.

But cash prices finished mixed on the day and the tone was termed heavy amid more secondary selling.

Traders said bond funds continued to put product up for the bid on the heels of last week's bargain basement sales. One firm estimated that just over $1 billion of bonds were put up for sale last week.

Traders reported a dull session yesterday as few players were willing to make any big bets on an already battered market that now faces today's producer price report and tomorrow's consumer price report.

Late in the day, 'traders reported some firmness in the market, but few bonds traded, they said. By session's end, some dollar bonds were quoted up 1/8 to 1/4 point, but the market was mixed overall.

In late secondary dollar bond trading, New York State Power Authority 5 1/4s of 2018 were quoted at yield 5.52%; TBTA 5s of 2020 were quoted at 93 3/8-3/4 to yield 5.47%; and Pittsburgh Water and Sewer FGIC 4-3/4s of 2016 were at 5.51% bid, 5.48% offered. Florida State Board of Education 5 1/8s of 2022 were 94 1/8-1/2 to yield 5.53% and Los Angeles DEWAP 5.40s of 2031 were quoted at 5.69% bid, 5.66% offered.

"Sellers continued to dominate and bid-wanted was pretty hefty for a Monday," one trader said. "If the forward calendar were to diminish and demand remain constant, we could get out of this hole. But that's not likely to happen. People are trying to protect their year right here and they aren't going to be making any big bets."

Buyers have generally been scarce over the past month, stranding the Street with bonds but few traditional customers. The Blue List of dealer inventory fell $28.7 million yesterday, but still totaled a sizable $1.95 billion.

Also reflecting the buy-side's desire to sell, Municipal Market Data Co. completed a survey of portfolio managers that showed deposit outflows in the $250 million to $300 million range. The redemption amounts, the firm said, were similar to those seen on Thursday. Portfolio managers indicated that they increased their cash positions from 1.61% of total assets on Oct. 22 to 3.5% on Nov, 5.

In the short-term note sector, meanwhile, yields were also mixed on the day. In late trading, California Rans were quoted at 2.75% bid, 2.70% offered; New York City Rans were at 2.80% bid, 2.75% offered; and Pennsylvania Rans were 2.75% bid, 2.70% offered.

The New York City Water Authority will sell $250 million variable rate securities this week as part of its larger $750 million long-term refunding. Traders said the sale would likely put pressure on the New York City note market.

In light new issue action yesterday, Legg Mason Wood Walker, Inc. priced $98 million Maryland Department of Transportation of revenue bonds in the negotiated sector.

Legg Mason said it received the verbal award at the original price levels.

Serial bonds were priced to yield from 2.80% in 1994 to 4.95% in 2005.

The offering is rated double-A by Moody's Investors Service, Standard & Poor's Corp., and Fitch Investors Service.

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