Yesterday may have seemed quiet, but careful ears could detect the sound of up to $29 billion of municipal debt being siphoned off by calls and redemptions.

June 1 was the "big call date of the year," according to Robert W. Chamberlin, a senior vice president and supervisory municipal analyst at Dean Witter Reynolds Inc. The $29 billion estimate covers debt maturing or being called on that date, Chamberlin said.

"It really casts a spell on the market," he said. The exodus is particularly significant in part because of the slow down in new issues, that analyst said.

"Everybody knows that the new issue calendar has sort of faded a way to nothing," Chamberlin said.

At the same time, participants also know that bond funds, though not completely free from redemption worries, are not under as much pressure to sell bonds.

"On balance, the bond funds appear to have gotten through the worst of the post February blues here," Chamberlin said. The Federal Reserve's first tightening on Feb. 4 trigered fear among bond funds that investors would redeem their shares.

"It certainly did happen," Chamberlin said, citing "vast" divestitures of bonds.

The letup in that pressure means funds are less likely to sell bonds in the secondary market. That, coupled with declining new supply and $29 billion of bonds leaving the market, means less overall supply. From the street's standpoint, "We're desperate for merchandise," he said.

What could shake loose some of bonds held by the funds would be a May employment report that the bond market sees as good for the economy, and, therefore, bad for bonds. An unfavorable number would likely prompt funds to sell, which would give the market at least a partial answer to its supply problem, Chamberlin said.

Economists polled by The Bond Buyer generally expect an increase of 275,000 non-farm jobs in May, with 15,000 coming from the manufacturing sector. The civilian unemployment rate is expected to hold steady at 6.4%.

"What that market is looking for is a selloff," Chamberlin said.

Tax exempts have gotten "quite expensive" relative to Treasuries, especially in the one to 10-year range, Chamberlin said. That run-up in price is likely to trigger a resistance level among retail buyers, he said.

Another municipal analyst, however, said it would take a much stronger than expected employment number to trigger a big enough sell-off to help allievate the supply problem.

To actually "pull bonds out of the woodwork it would have to be a dramatic number," he said. In addition, what buyers want right now are current coupon bonds, which are more likely to be new issues, rather than premium bonds or discount bonds, the second analyst said.

Overall yesterday, municipals ended unchanged. In debt futures, the June Municipal contract ended nearly 3/4 points higher at 92 5/32s. Yesterday's June MOB spread was negative 383 compared to negative 388 on Tuesday.

Municipal held their ground despite a Treasury market that sank nearly a point early in the session following a National Association of Purchasing Management report that came in unfavorable to the bond market.

Particularly irksome for bonds was the report's prices paid index, which showed that prices continued the upward trend begun in 1993, raising the diffusion index for prices to 71.5%. That marked the highest level since October 1990. New orders also continued to grow, but at the slowest pace in Oct. 1993.

The 30-year bond later rebounded, ending 1/2 point higher on the day to yield 7.37%.

Despite the government market's initial drop, "I don't feel like municipals are down," one municipal trader said yesterday morning.

On the buyside, Joe Deane, a managing director and portfolio manager of the Smith Barney Shearson Managed Municipals Fund, plans, at least for now, to be "neither a buyer nor a seller."

Deane said he is sitting back to see what happens to market following employment report, which the expects will be reflect a stronger economy than most economists predict. If the strong economic news pushes municipal yields sharply higher, it might present a buying opportunity, he said.

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