Tax-exempts ended a quiet day down 1/4 to 3/8 point yesterday.
"It just feels to me like everybody's got their heads in the sand," a trader said. Yesterday was a Monday coming off a down market, he said.
"We're dead over here," a participant at another firm said. The market dropped 3/8 point yesterday, he said, but attracted no real volume.
A municipal analyst pegged dollar bonds down 3/8 points, while yields on high-grade issues rose two basis points overall. Activity was light, he said.
In debt futures, the September municipal contract settled down 1/32 at 90 3/4. Yesterday's September MOB spread was negative 388, compared to negative 390 on Friday.
"We went off with Treasuries in the morning, and we really never came back," the analyst said. The Treasury market bounced around but ended lower yesterday, on concerns over the weak U.S. dollar and new supply.
As for this week's new issues, "There's really no deals to motivate anybody this week," a second trader said. "If retail keeps selling it's going to make it another tough week."
Today's negotiated calendar features $170 million New York State Medical Care Facilities Finance Agency bonds through Merrill Lynch & Co. and $175 million Santa Clara Valley, Calif., Water District Flood Control Authority certificates of participation through Paine Webber Inc. syndicate.
Tomorrow, $419 New York City Industrial Development Agency bonds are expected to be sold through a Smith Barney Inc. syndicate, and $200 million Santa Margarita, Calif., Water Control District bonds through a Paine Webber syndicate.
On the competitive ledger today are $102 million Clark Co. Nevada bonds, and tomorrow $99.9 million Dallas, Tex., bonds are expected to be bid for.
"There haven't been very many deals that I've really paid too much attention to," a portfolio manager said yesterday. "There's nothing on the docket that is of a nature that would get me really excited."
The portfolio manager said that what he was mainly looking for from the market this week is a sense of where it's going.
Margaret D. Patel, portfolio manager of the Advantage Municipal Bond, said she will pass on New York City's IDA deal.
"My New York fund is full, and I don't do AMT paper, so I'm just going to sit here and watch the market gently erode," Patel said. The New York Fund is one of three Patel runs, which total just under $58 million.
Patel expects erosion because "the Fed's going to raise rates again." While municipals on a pretax equivalent basis compare favorably to governments and corporates, "they can't be completely divorced from Treasuries."
However, while municipals are likely to go lower with Treasuries, there higher pretax equivalent yields make them a better investment than taxable bonds, Patel said. "It's the best investment in town on a relative basis," she said.
In other news, the 30-day visible supply of municipal bonds for today totals $3.94 billion, up $235 million from yesterday. That comprises $1.53 billion of competitive bonds, up $191 million from yesterday, and $2.42 billion of negotiated bonds, up $44.1 million from yesterday.
Meanwhile, New York State Comptroller H. Carl McCall announced plans yesterday to sell $160 million of state general obligation bonds through competitive bidding on June 28. The bonds, to be dated June 15, will mature in one to 30 years.