The Federal Open Market Committee meeting, tomorrow's employment report, and a residual holiday lethargy kept tax-exempts in a holding pattern yesterday.

"People are still in the Fourth of July mode," a municipal trader said. The trader also cited "a lot of uncertainty."

The FOMC meeting, which began Tuesday, concluded yesterday with no sign that the central bank had tightened monetary policy.

Overall yesterday, the market was "unchanged to slightly weaker on size," a municipal analyst said. Dollar bonds ended unchanged to 1/8 point higher, while yields on long intermediate high-grade issues rose by three basis points on the bid side.

The weakness in high-grades was due to a softer bid for the larger blocks, the analyst said.

In debt futures, the September municipal contract settled down slightly more than 1/4 point at 89 3/8. Yesterday's September MOB spread was negative 388, compared with negative 383 on Tuesday.

"It's a very quiet time," said Margaret D. Patel, a portfolio manager at the Advantage Municipal Bond Fund. "I'm pretty much fully invested."

Patel manages three municipal funds for Advantage, a national fund, as well as Pennsylvania and New York funds, totaling just under $58 million. She also manages a government securities fund totaling roughly $165 million.

Municipals have experienced a correction versus taxables in the past few weeks, but the correction is nearing an end, Patel said. Before the correction, municipals were approaching the rich end of their range of the past 12 months, she said.

While the correction may be winding down, down the market still feels heavy, Patel said.

"As a friend of mine said, 'It's bid list city out there,'" she said.

Despite the heaviness, the market is unlikely to tank, Patel said.

"When [new] supply is down 40%, you can't have a crash in the market," she said.

Patel said she has not seen any overwhelming bottom-fishing opportunities.

"I have not seen anything arresting," she said, adding that everything is pretty much trading in line. Municipals are still cheap to Treasuries on a pretax equivalent yield basis, she said.

For now, Patel, like the rest of the market, will wait to see what the Federal Reserve does on interest rates following the FOMC meeting and ahead of tomorrow's June employment report.

"I think it's well under 50-50," Patel responded when asked about the likelihood of a Fed tightening this week. For one thing, she said, former Fed governor Wayne Angell has said the Fed should act more aggressively to combat inflation, and the Fed doesn't want to appear to be reacting to that. Nor does the central bank want to be perceived as having a "kneejerk" reaction to the dollar's weakness or comparable events, Patel said.

On the new-issue front, the New Jersey Economic Development Authority is expected to sell $700 million of market transition facility series 1994 revenue bonds next week. The MBIA-insured bonds are scheduled to be negotiated through a Morgan Stanley group.

In competitive new-issue action yesterday, a Prudential Securities group won $61 million of Howard County, Md., series A unlimited tax consolidated public improvement bonds, bidding a true interest cost of 5.7732%.

Serial bonds were reoffered to investors at yields ranging from 4.25% in 1996 to 6.10% in 2014. Moody's Investors Service rates the offering Aal, Standard & Poor's Corp. rates it AA-plus, and Fitch Investors Service rates it AAA. A 1995 maturity was not reoffered.

Kidder Peabody submitted the cover bid with a TIC of 5.78991%, according to Bob Doory, an attorney with Miles & Stockbridge, bond counsel for Howard County.

In ratings action yesterday, Fitch Investors Service assigned a BBB-minus rating to the California Statewide Communities Development Authority's proposed $55 million cogeneration project revenue bonds, Series 1994A.

The issue will be done in two parts: $10.2 million of term notes due March 1, 2014, and $44.8 million of term notes due March 1, 2021. Proceeds will be loaned to Bayside Cogeneration, LP, to finance a 49.7 megawatt cogeneration power plant and a related desalinization plant, a Fitch release says.

"The Bayside project is expected to generate strong and consistent cash flows with average debt service coverage projected at 1.90 to 1," Fitch said.

Elsewhere yesterday, Standard & Poor's Blue List of bonds in dealer inventories fell $19.6 million to $19.7 billion.

The 30-day visible supply of municipal bonds for today totals $2.65 billion, up $280.6 million from yesterday.

That comprises $1.497 billion of competitive issues, up $81.3 million from yesterday, and $1.157 billion of negotiated bonds, up $199.3 million.

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