Prices stuck to neutral territory yesterday, while $640 million New York Local Government Assistance Corp. bonds dominated new issue activity.

Uncertainty has crept its way into the marketplace this week after a bullish month in which market players anticipated higher prices thanks to massive July 1 bond calls and payments.

But retail investors have pulled back this week, market players say, and prices have stuck to a narrow range, generally mirroring Treasuries as tax-exempt players gauge the next move.

Some traders said the July trade will come to fruition as expected, thanks to an influx of cash from the record July 1 redemptions.

But others argue that the effect of the July trade has been overemphasized once again and prices are wavering at the highs.

"People are defensive on the municipal side, not sure which way it's going to go," said one trader. "We're close to the highs and investors will want to see some real movement before they get enthusiastic, so we've paused right here."

Traders added that tax-exempts are likely to hug the Treasury market for support until a breakout to the upside is achieved or prices correct sharply when governments fail to climb to new ground.

Treasury prices sank on higher gold prices early yesterday, which gave way to profit taking. Long government prices floated back to positive territory by mid-session after the Commodities Research Bureau index declined, easing some inflation worries.

Tuesday, the Treasury market sold off on fears of higher inflation when the CRB jumped 5.29 points to close at 217.30.

The government market's ability to hold the yield on the 30-year bond at 6.67% near the end of New York trading prompted some traders to say the long bond will consolidate for several sessions before mounting another attack on the highs.

But tax-exempt traders were dubious about almost everything and prices closed decidedly mixed after the second up-and-down session in-a-row.

In the debt futures market, the September municipal contract settled unchanged at 102.08. The September MOB spread was unchanged at negative 367.

On the short-end, traders said note yields rose as dealers who had stocked paper ahead of the July 1 redemptions had to cut prices to move inventory.

New Deals

Two sizable refunding deals dominated new issue activity in the negotiated sector.

The new issues were said to have met with relative success, although not with the strong demand many had recently predicted and repricings were generally on a very moderate scale.

Topping the bill, Goldman, Sachs & Co. priced, repriced and restructured $640 million New York Local Government Assistance Corp. refunding bonds.

The offering was originally sized at $400 million, but boosted at the preliminary pricing.

The deal was priced approximately at current market levels. One market source said outstanding LGAC 5 1/2s of 2021 traded at 5.7 1% on Tuesday and the same bonds were offered at 5.68% yesterday.

At the repricing, a 2013 term maturity was eliminated and a 2012 serial maturity was added as were non-callable zero coupon bonds. The reoffering yield in 2011 was also raised about one basis point.

The final offering included serial bonds priced to yield from 4.40% in 1999 to 5.63% in 2012. A 2017 term, containing $158 million of the loan, was priced as 5 1/2s to yield 5.63%; a 2018 term, containing $156 million of the loan, was priced as 5 1/2s to yield 5.70%; and a 2021 term, containing $147 million of the loan, was priced as 5s to yield 5.66%.

Non-callable capital appreciation bonds were priced to yield 5.80% in 2013 and 2014.

The 2017 term is non-callable.

The issue is rated single-A by Moody's Investors Service and Standard & Poor's Corp. and A-plus Py Fitch Investors Service.

In other action, Goldman also priced and repriced $232 million Intermountain Power Agency power supply revenue refunding bonds.

At the repricing, the 2014 term yield was lowered by about two basis points.

The final offering included serial bonds priced to yield from 3.30% in 1995 to 5.35% in 2008. A non-callable 2014 term, containing $37 million of the loan, was priced as 5 1/4s to yield 5.513%.

The offering also included $21 million periodic auction reset securities and $21 million corresponding inverse floating rate securities.

The managers said they expected Moody's and Standard & Poor's to rate the issue double-A.

Smith Barney, Harris Upham & Co. tentatively priced $175 million Mississippi Higher Education Assistance Corp. student loan revenue bonds.

The offering included $14 million Sentor Series 1993-A bonds priced at par to yield 4.80% in 1999; $140 million Senior Series 1993-B, subject to the alternative minimum tax, priced at par to yield from 3.80% in 1995 to 5.85% in 2007; and $21 million Subordinate Series 1993-C bonds, subject to the AMT, priced at par to yield 6.10% in 2007.

The Series A and B bonds are triple-A rated by Moody's, while the Series C bonds are rated A.

Smith Barney also priced and repriced $103 million Niagara Falls Bridge Commission toll bridge system revenue bonds.

Term bond yields were lowered by five basis points at the repricing.

The final scale included serial bonds priced to yield from 2.65% in 1994 to 5.25% in 2008. A 2015 term was priced with a coupon of 5.25% to yield 5.35% and a 2021 term was priced as 5 1/4s to yield 5.45%.

The 2015 term is non-callable.

The offering is FGIC-insured and rated triple-A by Moody's, Standard & Poor's, and Fitch.

Merrill Lynch & Co. tentatively priced $162 million Rhode Island Public Buildings Authority refunding bonds.

Serial bonds were priced to yield from 2.50% in 1994 to 5.55% in 2010.

The offering is insured by the AMBAC Indemnity Corp. and rated triple-A by Moody's and Standard & Poor's.

The First Boston Corp. priced $120 million sales tax revenue bonds for San Bernardino County, Calif.

Serials were priced to yield from 3.30% in 1995 to 5.45% in 2010.

The issue is insured by the Municipal Bond Investors Assurance Corp., and rated triple-A by Moody's and Standard & Poor's, and A-plus by Fitch.

In follow-through business, First Boston freed $150 million Southern California Public Power Authority transmission project revenue bonds from syndicate restrictions.

In late secondary trading, the MBIA 5s of 2022 were quoted at 92 1/8-1/2 to yield 5.54%, unchanged on the bid-side from the original re-offering level.

Looking ahead to supply, the primary pipeline has been relatively light by this year's standards.

The Bond Buyer calculated 30-day visible supply at $4.74 billion, up only slightly from $4.48 billion Tuesday.

But more sizable offerings are on the way. Merrill Lynch yesterday said it would price $806 million Puerto Rico Highway and Transportation Authority new money and refunding revenue bonds next week. First Boston Corp. said it would price $600 million Georgia general obligation bonds next week.

Secondary Market

Traders reported moderate bid-wanted flow, dominated by a couple of bid-wanted lists, one in the $25 million range.

Reflecting the volatility in the market, traders said $10 million Pennsylvania COP 58 of 2015 traded at 92 3/4 to yield 5.57% late Tuesday, but changed hands at 92 to yield 5.64% at mid-morning yesterday. The COPS were quoted 92 1/4-3/8 to yield 5.61%.

In other secondary dollar bond trading, MBTA MBIA 5 1/2s of 2022 were quoted at 98 1/8-1/4 to yield 5.63% and Puerto Rico Public Improvement 5 1/4s of 2018 were quoted at 94 3/8-1/2 to yield 5.67%.

In the short-term note sector, yields were unchanged to five basis points higher, traders said.

In late action. Los Angeles notes were quoted at 2.67% bid, 2.60% offered; New York State notes were quoted at 2.78% bid, 2.10% offered; and Texas notes were quoted at 2.30% bid, 2.25% offered.

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