Yields on The Bond Buyer's municipal <

bond indexes rose for the first time in four weeks, fueled by inaction by the Federal Reserve Board, fears of higher oil prices, and strong economic data.

The 20-bond index of general obligation <

bonds increased seven basis points, to 6.58% from 6.51%, while the 11-bond GO index was up six basis points, to 6.46% from 6.40% a week ago. The 30-year revenue bond index's yield rose five basis points, to 6.74% from 6.69%.

The Bond Buyer revised the revenue <

bond index this week, replacing scarcely traded Puerto Rico Telephone Authority bonds with more actively traded Puerto Rico Electric Power Authority bonds. The new bonds are rated Baal by Moody's Investors Service and Aminus by Standard & Poor's Corp.

The average yield to maturity of <

the 40-bond daily Municipal Bond Index was up four basis points, to 6.64% from 6.60% last Thursday.

U.S. government bonds performed <

better than municipals, as the 30-year Treasury bond's yield remained unchanged for the second straight week at 7.85%.

The Treasury market bounced <

back from an off week, benefiting from news that earlier reports saying the Fed would not ease its monetary policy soon may have been erroneous.

Government bond prices took a <

dive early in the week after the Wall Street Journal reported Tuesday that Saudi Arabia had decided to call for higher oil prices. The article estimated that the move could tack $3 onto the price of a barrel of oil by the end of the year. Municipal bond prices fell, as well, but a light volume of new issues helped keep them from falling too far.

"It's definitely not good for people, <

but to me, it's not clear these [oil] prices will stick," said the head of a government trading desk. "OPEC members are notorious for cheating on quotas."

On Wednesday morning, the municipal <

market managed to hold steady after the Commerce Department reported that durable goods orders increased 1.4% in April and that it had revised March's increase of 2.1% to 2.3%. Several analysts said the report has been largely discounted because the bulk of the gains came in defense orders.

"The municipal market is in a <

holding pattern until the government market can react to the durable goods report," a trader said. "The initial reaction to the release was a bit of a sell-off, but now it seems to have rebounded."

Another market participant said, <

"There hasn't been that much trading. "Most investors are content to watch how the new deals are being priced. The market has a bit weaker tone to it, but that is really technical."

But a $2 billion surge in new <

bond sales finally took its toll on the municipal market late in the day Wednesday, driving prices down as much as 1/2 point.

"The market was overwhelmed <

by new issues, and the secondary shut down because people wanted to wait and evaluate their inventory compared to the new deal levels," one trader said. "The market will also be watching to see how the allotment process goes and whether buyers will get their bonds or go empty-handed to the secondary looking for some."

In the short-term municipal market, <

The Bond Buyer's one-year note index increased three basis points, to 3.37% from 3.34% last week.


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