Market participants adopted a wait-and-see stance ahead of today's unemployment report, keeping The Bond Buyer's weekly indexes little changed from last week.
The 20-bond and 11-bond indexes of general obligation bonds both dipped one basis point lower, to yield 6.27% from 6.28% a week ago and 6.19% from 6.20%.
The revenue bond index declined four basis points, to 6.52% from 6.56% last week.
The average yield to maturity of the 40 bonds used to calculate the daily Municipal Bond Index was down three basis points, to 6.44% from 6.47% last Thursday.
The twice-monthly revision in the index's list of bonds, with the most recent on June 30, raised the average coupon rate of the 40 bonds by eight basis points, to 5.85% from 5.77%.
"The holiday attitude just hasn't shaken loose," a market analyst said. "What helped keep the markets steady was that we didn't get an immediate tightening from the Federal Reserve Board. However, the Treasury market is still a little leery of just how much leeway [Federal Reserve Board Chairman Alan] Greenspan actually has."
The municipal market was mostly in lockstep with U.S. Treasury prices. The yield on the 30-year Treasury bond was off four basis points on the week, to 7.57% from 7.61% last Thursday.
The markets refused to budge on Tuesday and Wednesday of this week while the Federal Open Market Committee met. Some analysts and market players feared the FOMC would announce further tightening to stave off any inflationary pressures and to help shore up the weak dollar.
However, the meetings ended without the FOMC issuing a statement, indicating that the central bank has left interest rate policy unchanged for the time being, analysts said. The central bank's federal funds rate target stands at 4 1/4%.
However, concerns remain that the Fed will raise short-term interest rates again during the summer. A strong jobs report today, analysts believe, could be enough for Greenspan's Fed to raise interest rates a fifth time in 1994.
"A booming payrolls report will be reason enough for [the Fed] to reinstate the tightening process," an economist said.
"A very light calendar also contributed to the lack of movement in the municipal market," the analyst said.
Dealer inventories have declined a total of $400 million over six straight days. Standard & Poor's Corp.'s The Blue List was at $1.85 billion, down $280 million from a week ago. The Blue List has not been that low since June 15, when it was $1.74 billion.
Future forward supply has remained extremely thin as well. The Bond Buyer's 30-day visible supply was $2.65 billion yesterday. Although that is up $160 million from the previous Thursday's $2.49 billion, visible supply has now been under $3 billion for eight consecutive business days.