Supply pressures and worries over a rebounding economy chased regular investors from the municipal bond market this week, pushing yields on The Bond Buyer's indexes to double-digit increases.

The yields on the 20-bond and 11-bond indexes of general obligations both rose 11 basis points on the week to 5.31% and 5.21%, respectively, from 5.20% and 5.10%.

The two general obligation bond indexes are at their highest levels since Sept. 2, when the 20-bond was at 5.35% and the 11-bond at 5.26%.

The 30-year revenue bond index jumped 12 basis points to 5.56%, matching the level it reached on Aug. 26. Last Thursday, the revenue bond index was at 5.44%.

The average yield to maturity of the 40 bonds used to calculate the daily Municipal Bond Index increased 10 basis points, to 5.48% from 5.38% a week ago.

Treasury prices, after taking a similar beating earlier in the week, managed to regain much of their losses. The bellwether 30-year bond rose three basis points to 5.95% from 5.92% on Oct. 21, but it had closed at 5.99% on Monday.

The buyer erosion that suddenly shook municipals last week continued into this week as supply has been rushing back into the market.

"The backup in the market can be attributed to supply factors in both the primary and secondary markets," a municipal bond market analyst said.

Weekly new-issue municipal note and bond sales have not been under $5 billion since the week ended Sept. 10, and they have averaged $6.58 billion over that six-week period. Another $5.33 billion is expected this week.

Further, The Bond Buyer's 30-day visible supply has averaged $6.19 billion through October, with competitive deals swelling to an average of $3.07 billion, or almost 50% of total future supply. In September and August, the 30-day visible supply averaged $4.34 billion and $5.07 billion, respectively.

On Monday, the competitive component of visible supply reached $4.41 billion, the highest level ever recorded by The Bond Buyer.

On the secondary front, Standard & Poor's Corp.'s The Blue List, a measure of dealer inventory, puffed out to $2.09 billion on Thursday, an increase of $180 million from last Friday and the highest level since the $2.21 billion of Sept. 30.

So far this month, The Blue List has averaged $1.82 billion compared with $1.45 billion in September and $1.61 billion in August.

"In addition, recent economic data suggest that the economy would rebound strongly in the fourth quarter," a market player said.

On Tuesday, the Labor Department reported that workers' compensation costs rose 0.8% in the third quarter and that the overall employment cost index rose 3.6% compared with the same period last year. Both were better than expected.

Then on Wednesday, the Commerce Department reported a stronger than expected 0.7% increase in September for new orders for durable goods to a seasonally adjusted $132.8 billion. It was the third gain in four months.

The one-year note index, which was calculated Wednesday, rose one basis point to 2.76% from 2.75%

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