Trading was moderate as federal offices and banks were closed in observance of Veterans Day, but prices rose, thanks to lighter supply and greater demand.

The market's technical position has improved considerably since supply and weak demand crushed prices during October. Since the election on Nov. 3, few bond deals have been priced, while demand appeared to increase.

Yesterday's trading session was abbreviated, and prices were quoted up 1/4 point on average soon after the futures markets closed at 1 p.m. eastern daylight time.

But some bonds jumped as much as 1/2 point. For example, Bank of America freed $405 million California Public Works Board lease revenue bonds from syndicate restrictions, and the bonds made a strong move higher.

In late secondary trading, the 6.40s of 2016 were quoted at 99 7/8-lock to yield 6.41%, where they were originally priced to yield 6.47%.

In the debt futures market, the December municipal contract settled up 5/32, to 95.13.

But supply is on the increase, and issuers will be eager to bring deals as rates go lower, which could stifle gains, traders noted.

Treasury auctions have also stymied activity, and municipal players today will watch for the results of the last leg -- the sale of $10.25 billion of 30-year bonds.

Looking to tax-exempt supply, The Bond Buyer calculated 30-day visible supply at $7 billion yesterday, down only slightly from $7.6 billion Tuesday.

Secondary supply has steadily eased, and The Blue List of dealer inventory fell $90.6 million, to $973 million.

The last time The Blue List was below $1 billion was Sept. 11, when it weighed in at $990.5 million.

Hanging over the market are 31 negotiated issues totaling $2.74 billion and 10 competitive deals totaling $382 million on a day-to-day basis. About $1.2 billion of the negotiated deals are refundings, while $211 million competitives are refundings, which could be priced as rates head lower.

New-issue activity was practically non-existent yesterday, but in follow-through business, Goldman, Sachs & Co. also freed $92 million of Michigan Municipal Bond Authority state revolving fund revenue bonds from syndicate restrictions.

Secondary traders reported some blocks of bonds changing hands at higher prices, including California GO MBIA 6s of 2014, which were said to have traded around 5.32%.

In secondary dollar bond trading, prices were quoted up 1/8 to as much as 1/2 point, traders said.

In late action, California 6 1/4s of 2019 were quoted at 6.44% bid, 6.42% offered; New York City Water and Sewer 6 3/8s of 2022 were quoted at 96 1/2-5/8, to yield 6.64%; and Puerto Rico 6s of 2014 were quoted at 94 3/8-95, to yield 6.48%.

Denver Airport AMT 6 3/4s of 2022 were quoted at 94 7/8-95, to yield 7.16%, and Florida Board of Education 6s of 2025 were quoted at 94 3/4-95, to yield 6.38%.

In short-term note trading, yields were unchanged to three basis points lower on the day.

In late action, notes of Los Angeles, New Jersey, Pennsylvania, Texas, and Wisconsin were quoted at 2.85% bid, 2.80%.

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