The municipal futures contract slipped Tuesday after the durable goods report was released, but cash trading was comatose ahead of the holiday.

New orders for durable goods in November advanced 1.2%, to $124.7 billion on widespread increases in most industries, the Commerce Department reported on Tuesday.

The news had little effect on the market as a whole, but futures traders sold the contract after the report was released. The bellwether March contract settled down 4/32, to 96.25.

The bid-wanted wires were very quiet, and traders said there was little trading activity.

In secondary dollar bond trading, Port Authority of New York and New Jersey 6 1/2s of 2021 were quoted at 97 3/4-98 1/2 to yield 6.61%. Pennsylvania Turnpike 6 1/2s of 2013 were quoted at 98 1/4-3/8 to yield 6.54%.

In the short-term market, note yields were mostly unchanged to slightly higher as prices drifted in listless trading.

In secondary action, California Rans were quoted at 3.10% bid, 3.08% offered, while Los Angeles Trans were quoted at 3.12% bid, 3.08% offered. Texas Trans were quoted at 3.10% bid, 3.05% offered. New York city Trans were quoted at 4.40% bid, 4.30% offered, and New York State Trans were quoted at 4.20% bid, 4.10% offered.

Today and tomorrow's sessions promise more quiet activity, although jobless claims and existing home sales, due out today, may give the market a bias.

Looking ahead, the Street will be anticipating strong demand from investors laden with turn-of-the-year cash, but some market observers warn that the trend may be weaker than some hoped.

Adam V. Topalian, a vice president in Smith Barney, Harris Upham & Co.'s portfolio strategy department, said in the firm's latest newsletter that the so-called January effect will be somewhat muted.

He noted that much of the January demand is already in the market and that business from cross-over buyers, which was strong over the last month, will have to be unwound, putting some selling pressure on the market. He adds that supply is likely to be heavier than usual in January as cash-strapped issuers take advantage of very low interest rates, which could also cap price gains.

But the oveall outlook is for lower interest rates, market players say, as both the technicals and the fundamentals remain in the market's favor.

"Municipals should continue to perform well as retail investors become accustomed to current rates and start reinvesting coupon interest, and as the volume of prerefunded issues coming due increases and is reinvested," Mr. Topalian concluded.

Supply is expected to grow in January, but on Tuesday The Board Buyer's 30-day visible supply totaled a paltry $607 million, while Standard & Poor's The Blue List of dealer inventory stood at $841 million.

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