Municipal prices faded yesterday, following the release of healthier than expected economic indicators, and continued last week's general retreat.

Signs of economic strength and a distinct lack of buyers continued to Force tax-exempt prices lower. The market has suffered at least 1/4 to 1/2 point losses each day for more than one week and yesterday was no exception.

The market opened up 1/8 to 1/4 point lower, traders said, with a heavy-tone. The lifeless atmosphere intensified after more economic reports showed signs of revival. The National Association of Purchasing Management's index increased to 53.8% in October from 49.7% in September.

A reading above 50% indicates that the manufacturing sector is generally expanding, while a reading below 50% indicates it is generally declining.

Meanwhile, construction spending increased 0.8% in September, the fifth straight monthly rise, the Commerce Department reported.

Bond prices declined in lackluster trading throughout the day, traders said. The 30-year Treasury bond was quoted down 25/32 to 6.01% near the end of New York trading.

"The bid-side was soft, there was very little customer interest and it feels like it's going lower," a trader said. "It has no guts, although we continue to do battle in the same range."

By session's end, tax-exempt prices were quoted down 3/8 to 1/2 point on average, although some bonds lost as much as one point, traders said.

In late secondary dollar bond trading, Florida Board of Education 5 1/8s of 2022 were quoted at 95 7/8-96 3/8 to yield 5.40% and Valdez, Alaska 5 1/2s of 2028 were quoted 98-1/4 to yield 5.63%.

Also, Atlanta Water and Sewer 4 3/4s of 2023 were quoted at 5.37% bid, 5.33% offered; New York City 51/2s of 2017 were at 5.83% bid, 5.72% offered; and Salt River 4 3/4s of 2017 were 5.32% bid, 5.30% offered.

In the debt futures market, the December municipal contract settled down 19/32 to 103.07. The contract settled just off the low of 103.04. The MOB spread narrowed to negative 460 from negative 478 on Friday.

Looking ahead, players have more reason for caution as the market faces several sizable competitive deals. Underwriters face increased risk when they bid for competitive deals in a down market. They are not afforded the flexibility to adjusted prices to market conditions as they are in negotiated pricings.

Players said yesterday the deals could add to already burdensome supply pressure. The Blue List of dealer inventory slipped $47.5 million yesterday, but reflecting the scarcity of buyers, the list of bonds for sale still weighed in at a hefty $1.99 billion.

Dominating today's competitive slate are $627 million Los Angeles Department of Water and Power Authority refunding revenue bonds. Late yesterday, outstanding DEWAP 5s of 2033 were said to trade at 93-1/2 to yield 5.43%.

New issue activity was light yesterday, but PaineWebber Inc. did jump in with a sizable deal. The firm, heading a 17-member syndicate, priced and repriced $207 million Orlando-Orange County Expressway Authority junior lien revenue refunding bonds.

At the repricing, serial bond yields were lowered by five basis points from 1997 through 2002. Yields were raised by five basis points in 2003 and by two basis points in 2009, 2011, 2019, and 2020. Yields were raised by about three basis points in 2017.

The final Orlando-Orange pricing included serial bonds priced to yield from 3.6 5% in 1997 to 5.23% in 201 0. A 201 1 term was priced as 5 1/8s to yield 5.25%; a 2017 term was priced as 5s to yield 5.35%; a 2019 term, containing $68 million of the loan, was priced as 5 1/4s to yield 5.40%; and a 2020 term, containing $54 million, was priced as 5 1/8s to return 5.39%.

The bonds are insured by the Financial Guaranty Insurance Co. and rated triple-A by Moody's, Standard & Poor's, and Fitch.

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