Prices were unchanged yesterday, but last week's heavy tone carried over and the market braced for more deals and more weakness.
Municipals ceased their free fall yesterday, after posting sharp losses all last week.
But trading was lackluster as the market sat saddled with bonds and little business flow. The Blue List of secondary dealer supply fell $58.3 million, but still totaled $2.1 billion, reflecting heavy dealer inventory.
The Blue List is averaging $1.71 billion in July, the highest monthly average of the year.
Traders said they were demoralized after five straight days of sharp losses, despite some resilience in the Treasury market. The bid for municipal bonds continued to be weak, traders said, and any real selling could rout the market again.
"It's a good old-fashioned whipping," one trader said. "We're down 20 to 25 basis points over the last week or so and we're wondering if we're going to have to fall another 25.
"Traders are trying to lessen the pain, but there's little dialogue and people are finding plenty of reasons to do nothing," he said.
Traders reported some customer bid-wanted lists with items in the $4 million to $5 million range, but activity was dull.
Some dollar bonds were quoted 1/8 to 1/4 point higher, while others were down the same amount.
By session's end, prices were quoted unchanged overall, but traders said the market felt weaker.
Contributing to the negative tone in the cash market, debt futures improved, hurting traders with short positions in the contract.
The September municipal contract settled up 6/32 to 1001.19. The MOB spread widened to negative 431 from negative 427 Friday.
In secondary dollar bond trading, New York State Med. Care 5.70s of 2029 were quoted at 5.88% bid, 5.87% offered; Pica MBIA 5 5/8s of 2023 were quoted at 5.89% bid, 5.88% offered; and New York City 5.80s of 2013 were quoted at 97 1/2 to yield 6.06%.
WPPSS MBIA 5.60s of 2015 were quoted at 5.89% bid-none; SALT of 2019 were quoted at 5.79% bid, 5.77% offered; and Puerto Rico 5 1/2s of 2019 were quoted at 5.71% bid, less 3/4.
In the short-term note sector, yields fell three to five basis points on average, traders said.
In late action, California revenue anticipation notes were quoted at 3.00 bid, 2.95% offered; Los Angeles tax and revenue anticipation notes were quoted at 3% bid, 2.95% offered; Texas Trans were quoted at 2.50% bid, 2.45% offered; and New York State Trans were quoted at 2.55% bid, 2.50% offered.
The market has little to look forward to except more new issues.
The Bond Buyer calculated 30-day visible supply at $8.3 billion, up from $7.8 billion Friday as issuers continued to scramble after still low interest rates.
Today's competitive sector is expected to be crowded and will gauge stability.
The slate features $358 million of Minnesota various general obligation bonds. $187 million of Los Angeles various improvement bonds; 177 million of Hillsborough, Fla., refunding revenue bonds; and $136 million of Clark County School District refunding bonds.
In the negotiated sector, $440 million of North Carolina Eastern Municipal Power Agency revenue bonds are expected to be priced by Smith Barney, Harris Upham & Co.