The Bond Buyer's municipal bond indexes posted slightly lower yields this week in quiet preholiday trading.

The 20-bond index of general obligation yields dropped three basis points, to 6.74% from 6.77% last Thursday, while the 11-bond GO index fell two basis points, to 6.65% from 6.67% a week ago.

The 30-year revenue bond index declined three basis points, to 6.99% yesterday from 7.02% a week ago.

The weekly indexes now have reached their lowest levels since Oct. 21, when the 20-bond index was 6.64%, the 11-bond index was 6.54%, and the revenue index was 6.95%.

The weekly indexes were calculated yesterday instead of Thursday because of the Christmas holiday.

The average yield to maturity of the 40 bonds used in calculating the daily Municipal Bond Index dropped four basis points on the week, to 6.94% yesterday from 6.98% last Thursday.

Tax-exempt bond prices finished unchanged to 1/8 point lower last Friday, as the market began to recover from the turnmoil in Orange County, Calif., and to slow down for the holiday season.

Prices drifted higher the rest of the week, as the Federal Open Market Committee decided against tightening monetary policy for the time being.

Bond traders noted that supply factors were favorable for higher prices; while bid-wanted lists were somewhat heavy for the holiday period, and dealer inventories, as measured by Standard & Poor's Corp.'s the Blue List, rose during the week to $1.91 billion yesterday from $1.55 billion last Thursday, the 30-day visible supply dwindled sharply during the same period, to $862 million from $2.4 billion.

U.S. government securities kept pace with municipals this week, on the favorable FOMC news and good results for yesterday's two-year note auction. The yield on the bellwether 30-year Treasury bond declined three basis points, to 7.83% from 7.86% last Thursday. The short end of the municipal market moved substantially higher for the second week in a row. The Bond Buyer's one-year note index jumped 14 basis points the week before. The index has risen 148 basis points this year, from 2.51% on Jan. 5, and now is at its highest level since July 31, 1991, when it was 5.21%.

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