Municipals ended unchanged yesterday as players braced for today's September employment report and a possible tightening of monetary policy.

"Serials are really quiet. Everybody's waiting for the numbers tomorrow," one municipal trader said. The market "got beat up [Wednesday] and the day before, and I think they are just waiting to see what happens" today.

The trader estimated that bid lists totaled $250 million yesterday. "Lots of lists came out [yesterday], mostly long dollar bonds more than anything else," he said. Yesterday's volume was less than Wednesday's, the trader said, when he estimated that lists totaled some $350 million.

In light secondary activity, yields on high-grade issues ended unchanged. Dollar bonds finished mostly unchanged, although some were quoted slightly higher and others were quoted slightly lower, a municipal analyst said.

"I think the market just sat on its hands," he said.

In debt futures, the December municipal contract settled down 10/32S at 85 23/32S. Yesterday's December MOB spread was negative 384, compared with negative 376 on Wednesday.

Mitsubishi Bank financial economist Christopher Rupkey expects that today's report will show a 225,000 gain in September non-farm jobs.

"The big story is that it's coming back to trend, which is more or less 250,000," Rupkey said. He noted that Kansas City Fed president Thomas Hoenig said the trend in recent months has been for non-farm jobs increases of about 250,000.

"And if that's the trend, you have to wonder if the Fed can actually pull the trigger after 250,000," the economist said.

Still, Rupkey doesn't think consistency with the trend will keep the Fed's tightening proclivities on hold, he said.

"The market is primed [for a rate hike]. The short end of the market is discounted 50" basis points, he said. "Certainly, all the data backs up a tightening. There's not one piece of data you can point to that suggests the Fed should hold off. In the bond market, with yields getting close to 8% yesterday, [it] suggests that the market thinks the Fed is back behind the curve on inflation. So the sooner they move the better."

Rupkey sees a greater than 50% chance that the Fed will move after tomorrow's report, and, if it does, there be a 50-basis-point increase in both Fed Fund and the discount rate.

"I would have to say 25 is possibly outside the range of possibilities -- 50 or nothing," he said.

Brian Fabbri, chief economist for North America at Paribas Capital Markets, New York, expects a 260,000 increase in nonfarm jobs today. Like Rupkey, he also noted that expectations are largely consistent with the trend established for the past few months.

"Therefore, maybe we shouldn't get too excited about it being 260,000 or 270,000, because that has become the average of the last few months," he said.

Fabbri, however, thinks a Fed short-term rate increase is a near certainty.

"I think a Fed tightening is in the cards almost regardless of what the numbers show," he said. "If they're on average or better than average, then I guess the rationale is pretty much in place.

Fabbri said the only remaining question remaining is what would happen if nonfarm jobs increased by just 200,000.

He added, however, that recent economic figures point squarely in the direction of a rate increase.

"I think because there's been such a slew of strong economic data that's been coming out, I suspect that they're almost duty bound to tighten," he said.

Fabbri said the markets have already priced in a 50-basis-point tightening "so from the point of view of managing monetary policy FOMC members are just playing catch up."

The economist said Wednesday's report on August factory orders and Monday's National Association of Purchasing Managers' August index, both point toward "good gains in employment."

"I think we've got substantial growth in the manufacturing area," Fabbri said.

Participants will also be watching the hourly earnings and work week components of today's employment report, he said.

"I think the workweek will be strong, up 0.2%," Fabbri said.

Also noteworthy will be the unemployment rate itself, the economist said, "not because people look at it so closely but rather because, if it does go to 6%, that's the perceived full employment level, and maybe that will have special significance, more than it ordinarily carries."

In new-issue action yesterday, a Goldman, Sachs & Co. group priced and repriced $197 million of California Housing Finance Agency bonds. The offering consisted of serial bonds, priced to yield from 4.75% in 1996 to 6.50% in 2008. A 2015 term, containing $20.8 million, was priced to yield 6.875%. A 2026 term, containing $62 million was priced to yield 7%. At the repricing, Ambac insurance was added to the serials, while the yield on the 2015 term was increased by two basis points.

Turning to next week's new issues, a $100 million Montgomery County, Md., offering of consolidated public improvement bonds tops the competitive calendar. The offering is slated for Wednesday. Also on Wednesday, Sacramento, Calif., is expected to sell $90 million public facilities project revenue certificates of participation. Also next week, in the short-term market, Pennsylvania is expected to sell $600 million of tax anticipation notes.

On the negotiated front, Smith Barney Inc. is scheduled to bring $180 million of Texas general obligation bonds.

In other news yesterday, the 30-day visible supply of municipal bonds totaled $4.97 billion, up $1.617 billion from Wednesday. That comprised $1.309 billion of competitive bonds, down $278.9 million from Wednesday, and $3.66 billion of negotiated bonds, up $1.896 billion from Wednesday.

Standard & Poor's Blue List of municipal bonds rose $27.6 million yesterday to $1.97 billion.

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