Falling single-family home sales in May helped push municipal prices up as much as 1/4 point Wednesday, while the short-term sector sagged under the weight of $1.2 billion of New Jersey notes and a tailing off of coupon reinvestment.

A group including Lehman Brothers as senior manager tentatively priced and then repriced the New Jersey tax and revenue anticipation notes to raise the yield five basis points.

The final pricing came in at 100.362 as 5s to yield 4.60% to the June 15, 1992, maturity. The notes are rated MIG-1 by Moody's Investors Service and SP1-plus by Standard & Poor's Corp.

The notes were originally priced at 4.55%, but a Lehman Brothers officer said the issue received only a mixed reception at that level. Investor cash from coupon reinvestment has trailed off, the officer noted, and the deal saw "substantial pick-up" at the adjusted level.

Market participants added that the deal did not suffer after Standard & Poor's Corp. lowered New Jersey's state general obligation bond rating to AA-plus from triple-A.

Meanwhile general market note yields rose as much as 20 basis points on the day. Yields had fallen in the first two trading sessions this week as investors bought notes with cash from coupon payments at the turn of the month. But, traders said that the demand slowly disintegrated on Wednesday, forcing yields back up.

March New York State tax and revenue notes were quoted near the end of cash at 5.17% bid, 5.10% offered, compared ton5.02% bid, 5% offered Tuesday. Los Angeles County notes were quoted at 4.55% bid, 4.50% offered, compared to 4.33% bid, 4.30% ffered Tuesday.

The bond sector fared better as sales of new single-family homes tumbled 3/3% in May to a seasonally adjusted annual rate of 474,000 for the second straight monthly decline.

"The housing sector isn't out of the woods yet," said James L. Kochan, head of fixed-income research at Robert W. Baird & Co. "We had a flurry right after the war, but the housing sector still faces many of the same problems that were created by the recession in the first place and there won't be much of a rebound from this level in June either."

Secondary traders cited plentiful cash with some sizable buyers looking for bonds after the number was released with moderate business reported. But professional trading remained very light ahead of today's employment data. Today's employment figure for June is expected to show a slight increase and traders said it will set the tone going into next week's producer price index data.

New York City GO bonds traded up in price again Wednesday on thin supply in the serial bond secondary market. Bonds changed hands as low in yield as 8.30% for long maturities with an 8 1/4% coupon.

In secondary dollar bond trading, New York LGAC 7s of 2016 were quoted up 1/8 to 95 1/4-1/2 to yield 7.40%. South Carolina Public Service Authority 7.10s of 2021 were up 1/4 to 98 7/8-99 1/2 to yield 7.14%. Florida State Board of Education 7 1/4s of 2023 were unchanged and locked at 102 to yield approximately 7.01% to the 2004 par call.

News of the proposed refinancing of New Jersey Turnpike Authority bonds continued to boost prices of the outstanding 7.20s, due 2018. They were bid 3/4 higher and offered 1/4 higher yesterday at 102 3/4-103 1/4 to yield 6.64% to the par call in 1999 and 6.81% to the premium call in 1993.

Prerefunded bond prices were firmer and yields fell three basis points on the day. National names with a 1995 call were quoted at 5.90% bid, 5.88% offered near the end of cash trading.

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