A disappointing Treasury auction pushed municipal prices 1/4 point lower on average yesterday, and traders reported a heavy tone as visible supply totaled $5.9 billion--a high for the year.

The first leg of the Treasury's $38 billion annual refunding soured late in the session, and the government long bond fell more than a point. But tax-exempts lagged significantly, with some high-grade yields up only three basis points in the intermediate range. Off-the-run names were down as much as 3/8 point on the day.

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