Prices were unchanged Friday in slow holiday trading as tax-exempt players vacated early, avoiding price losses in the Treasury market.

The narrow passage of the President's budget plan by the House was not definitive enough to indicate prospects for deficit reduction.

Instead, municipals opened quietly with a slightly lower bias in sympathy with the Treasury market's negative reaction to signs of higher inflation in the gross national product report.

The markets had little reaction to the Chicagoland business barometer, which decreased to 53.1% in May on a seasonally adjusted basis from 54.3% in March.

An index reading below 50% signals a slowing economy, while a level above 50% suggests expansion.

By session's end, prices were quoted unchanged overall.

In the debt futures market, the June municipal contract settled down 10/32 to 100.17. The June MOB spread narrowed to negative 317 from negative 333, as price losses in the government market were greater than municipal drops.

The government market gapped nearly one point lower after the Federal Reserve completed its purchases of one- and two-year bills. The Treasury bond futures contract took out a key support level, leaving little enthusiasm on the long end.

Looking ahead, Friday's employment data will likely give the market some clues to near-term price prospects.

The economic calendar also includes personal income and construction spending data that will be released today, followed by new home sales tomorrow. Initial claims and auto sales will be released Thursday.

Supply will also continue to pose an obstacle for prices, market players said.

The Bond Buyer calculated 30-day visible supply at $8.6 billion Friday, up from $6.2 billion Thursday.

The Blue List of dealer inventory, meanwhile, fell $99.7 billion, to $1.6 billion.

Issuers are expected to tap the market for $7.7 billion this week alone.

The negotiated sector is dominated by $800 million of New York State Dormitory Authority refunding revenue bonds, to be priced by Goldman, Sachs & Co. The authority's offering had been slated for sale more than a week ago, but was delayed due to market conditions.

Other sizable negotiated issues include $515 million of Puerto Rico Building Authority revenue bonds, to be priced by the First Boston Corp.; $335 million of District of Columbia general obligation refunding bonds, to be priced by Goldman Sachs; and $257 million of Austin, Tex., commission utility system revenue refunding bonds, to be priced by Lehman Brothers.

The competitive sector features $173 million of Pennsylvania GOs and $140 million of Anaheim, Calif., Public Financing Authority various-purpose revenue bonds.

The short-term sector includes $300 million of Iowa School Corp. warrant certificates, to be priced by Piper Jaffray Inc.; and $255 million of San Bernardino County, Calif., tax and revenue anticipation notes, to be sold competitively.

Friday's Market

Traders reported a very quiet session, with few bid lists circulating in the secondary or changing hands.

In secondary dollar bond trading, Farmington, N.M., MBIA 5 7/8s of 2023 were quoted at 99 5/8-7/8 to yield 5.90%; California Water 5 1/2s of 2023 were quoted at 5.83% bid, 5.80% offered; and Texas Municipal Power MBIA 5 1/4s of 2012 were quoted at 5.82% bid, 5.80% offered.

Washington Public Power Supply System MBIA 5.70s of 2017 were quoted at 96 3/4-97 to yield 5.95%; Los Angeles DEWAP 5 7/8s of 2030 were quoted at 99 7/8-100 1/8 to yield 5.88%; and Chicago GO FGIC 5 5/8s of 2023 were quoted at 95 5/8-3/4 to yield 5.93%.

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