Investors continued to flock to the tax-exempt new-issue market yesterday giving a warm reception for $793.1 million New York City bonds and $4.1 billion California notes and enabling underwriters to lower the yields on the issues as much as 10 basis points.

In the meantime, prices in the secondary market got a boost from a 25 basis-point cut in the federal funds rate and solid gains in the government securities sector. Dollar bonds closed 1/8 to 1/4 point higher on the day, but note prices gained enough to slash yields 15 basis points.

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