Municipal prices recovered Friday, after falling nearly one point late last week, and light supply and few economic indicators are likely to trap prices in the current range.

The bulls ran wild during the early part of last week and yields on municipal issues dipped to some of their lowest levels of the year.

But the credit markets turned lower Thursday after lingering hopes for an immediate ease in interest rates were wiped away by news reports that the Federal Reserve would not intervene soon.

On Friday, prices were unchanged to 1/8 point higher in spots in light trading during a session that was abbreviated due to the long holiday weekend.

In the debt futures market, the June municipal contract settled 7/32 higher to 95.21.

Looking ahead to this week, participants said a paucity of economic indicators should keep the markets in a range and allow tax-exempt participants to rifle through a manageable slate of new deals.

The market will not get a look at significant economic indicators until the June 5 employment report, but April durable goods data will be reported tomorrow, followed on Thursday by initial unemployment claims for the week ended May 16.

Supply remains relatively light, although market players have become cautious after the latest price dip. The Bond Buyer's 30-day visible supply stands at $3.9 billion, while the Standard & Poor's Corp.'s Blue List of dealer inventory rose to $1.29 billion.

About $2.8 billion of new securities will hit the Street this week and only a few sizable deals are slated for sale.

The negotiated sector will feature $305 million of Rhode Island Health and Education Building Economic Protection Corp. special obligation bonds, to be priced by Donaldson, Lufkin & Jenrette Securities Corp.; $280 million of Detroit water system revenue and revenue refunding bonds, to be priced by Goldman, Sachs & Co.; and $250 million of Clark County, Nev., general obligation limited tax transportation improvement bonds, to be priced by Smith Barney, Harris Upham & Co.

The competitive sector will be dominated by three sizable deals: $257 million of District of Columbia improvement bonds; $173 million of Baltimore County, Md., bonds; and $76 million of Denver city and county bonds.

Friday's Market

Trading was practically nonexistent Friday as most market players headed home early for the holiday. Traders said there was scattered activity, but nothing of size.

In secondary dollar bond trading, Greater Orlando Aviation Authority AMT insured 6-3/8S of 2021 were quoted at 97-1/2-5/8 to yield 6.56%; New York City GO 7s of 2022 were quoted at 7.26% less 1/4 bid, 7.26% net offered; and New Jersey Turnpike Authority 6-1/2s of 2016 were quoted at 99-3/4-100 to yield 6.52%. New York State Power Authority 6-1/4s of 2023 were quoted at 97-3/8-1/2 to yield 6.44% and South Carolina PSA 6-5/8s of 2031 were quoted at 98-3/4-99 to yield 6.71%.

In the short-term sector, participants reported a quiet day. One trader said that most note prices, though they had rebounded off Thursday's low, were reported lower on the day.

Of the actively traded issues, California revenue anticipation notes 3-1/4s were quoted at 3.55% bid, 3.50% offered; Los Angeles tax and revenue anticipation notes 5s were quoted at 3.55% bid, 3.50% offered; Pennsylvania Tans 5-1/4s were quoted at 3.56% bid, 3.50% offered; and New York State Trans 3.65s were quoted at 3.39% bid, 3.38% offered.

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