Municipals will come up for air this week after last week's deluge of supply, giving traders a chance to tidy their positions before issuers' pre-holiday rush.

About $3.5 billion in securities flooded the market last week, and activity slowed as traders worried that supply would bog down the secondary market. But after two dismal legs of the Treasury's $38 billion annual refunding, the final part went without a hitch on Thursday, and bond prices found renewed strength and demand from buyers.

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