Municipals chopped sideways yesterday in dull holiday trading, although futures prices closed lower on stronger-than-exected economic indicators.

The market opened with a yawn. The quietest week of the year left market players with little to do. Bond traders got an early look at an ever improving economy, although prices were affected only slightly. The index of leading U.S. economic indicators gained 0.5% in November, duplicating October's increase, the Commerce Department reported. Sales of previously owned home grew 2.9% in November to a seasonally adjusted annual rate of 4.21 million units, the National Association of Realtors reported. The November pin followed a revised 3.8% increase in October, earlier reported as a 3.6% pin.

Tax-exempts were mixed soon after the two economic indicators were released and prices closed at very much the same levels they held early in the day. Some traders did report a better bid for certain sectors, including insured bonds. They said some prices were quoted 1/4 point higher on the day. Some traders speculated that the Street is bidding up bonds ahead of what some expect will be at least a marginal price rise in early January after annual redemptions and other various payments leave investors with cash to spend. New issuance is expected to be much lighter in the upcoming year after this year's record breaking performance.

Reflecting the firm underlying tone, The Blue List of dealer inventory fell $142.3 million yesterday, to $1.63 billion. At the same time, The Bond Buyer calculated 30-day visible supply at a paltry $ 3.07 billion.

In debt futures, the March municipal contract settled down 3/32 at 103.30.

New issuance was practically non-existent yesterday, although underwriters reported some follow-through business from new deals previously priced.

CS First Boston, senior manager for $30 million Virginia Housing Development Authority revenue commonwealth mortgage bonds, reported an unsold balance of $6.7 million.

Goldman, Sachs & Co. reported an unsold balance of $14 million from the $30 million issue of Newark, N.J., unlimited tax general improvement bonds.

Secondary trading was equally lackluster, players said.

In secondary dollar bond trading, Valdez, Alaska 5.65s of 2028 were quoted at 100-3/8 to yield 5.65%; Florida MPA 5.10s of 2025 were 5.34% bid., 5.32% offered; and New York City Water 5 1/2s of 2019 were quoted 5.56% bid, 5.53% offered.

Los Angeles MTA AMBAC 5 1/4s of 2023 were quoted at 5.38% bid, none; Orange and Orlando Expressway FGIC 5 1/4s of 2019 were 5.33% bid, 5.30% offered; and Florida Board of Education 5.20s of 2023 were quoted at 98-1/4 to yield 5 33%.

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