Supply pressures and mutual fund selling continued to take their toll on municipal bond prices, pushing yields of The Bond Buyer's indexes higher for the fourth consecutive week and to their highest levels since May.

The 20-bond index of general obligation yields rose nine basis points, to 6.62% from 6.53% last week, and the 11-bond index rose 11 basis points, to 6.53% from 6.42%.

The 30-year revenue bond index climbed 10 basis points, to 6.81% from 6.71% last week.

The general obligation indexes are at their highest levels since May 7, when the 20-bond index was 6.64% and the 11-bond index was 6.53%, and the revenue index is at its highest level since April 30, when it was 6.83%. Since July 30, when the GO indexes hit 14-year lows and the revenue bond index recorded an all-time low, the 20-bond and 11-bond indexes have risen 73 basis points and the revenue bond index has shot up 69 basis points.

The Bond Buyer's daily Municipal Bond Index's average yield to maturity rose 12 basis points to 6.70% from 6.58%. That matches the level of May 7.

"Bonds are not trading on fundamentals," a trader said. "They're trading on technicals which have been eroding." Supply continues to be the primary reason for the market's difficulties, he said, and "mutual funds are experiencing their yearends."

"This is their last chance to offset gains with losses," he said. "We've had several hundred million in bids this week from he funds. Overall, technicals are not in good shape."

A market analyst echoed that sentiment, saying that upward pressure on bond prices has come from "mutual funds moving out paper. They've been moving out some big coupons, and they've basically given upon some issues for refundings. And most mutual funds are in a position to sell on redemptions."

The trader also noted, "Insurance companies have been selling steadily over the last several weeks, about $50 million a day. In addition, because of Hurricane Andrew, they've been absent [as buyers] from the market.

The trader acknowledged that "some customers have been putting cash to work. Bonds have been slowly moving out of the market. But we're a long way from bringing supply under control. Mainly because of refundings, which just aren't working right now."

"We're cautious on [interest] rates over here," the analyst said, referring to near-term expectations. "But we expect them to remain around this level, possibly bounce a little higher, for the remainder of the year. A Bush upset [in the presidential elections] might make us more constructive, but that isn't expected."

Treasuries posted a technical rebound on Wednesday, erasing some of the week's losses, and the bellwether 30-year bond yield finished unchanged on the week, at 7.59%.

Although the long end was battered this week. The Bond Buyer's one-year note index declined six basis points, to 2.91% from last week's 2.97%. A market watcher said the note market has been thin, and since it is the end of the month, there has been anticipation of incoming money from mutual funds.

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