Countervailing forces kept municipal bonds in a narrow range last week, and yields on The Bond Buyer's indexes were nearly unchanged.

Yields were pushed higher after economic reports at the start of the week showed that the pace of growth may be increasing, especially in auto and home sales. The market also faced hefty new issuance at midweek, further depressing prices.

But excitement over the North American Free Trade Agreement sparked a minor rally in the Treasury market, buoying tax-exempts. Economists believe the immediate reduction in tariffs on both sides of the U.S.-Mexican border will lower prices and combat inflationary pressures.

By week's end, the rally sputtered and new signs of accelerating growth emerged.

The 20-bond index of general obligation bond yields was 5.46%, unchanged from Nov. 10. The index remains at its highest point since Aug. 6.

The 11-bond GO index was down one basis point, to 5.35% from 5.36% last week. Last week's reading was the highest yield since Aug. 12.

The revenue bond index was one basis point higher, to 5.70% from 5.69% last week.

In the taxable market, the 30-year Treasury bond yield was up two basis points, to 6.22% from 6.20% last week.

The average yield to maturity of the 40 bonds used to calculate the daily Municipal Bond Index, which is comprised mainly of revenue bonds, was up one basis point, to 5.61% from 5.60% last week.

The market yawned after statistical releases provided little new insight into the state of the economy. On Monday, the government said that industrial capacity rose 0.5% to 82.4% in October, largely on the strength of the automotive manufacturing sector. Industrial production was up 0.8% for October.

The market traded down slightly on the evidence of renewed economic activity, but prices recovered and finished the day mixed.

On Wednesday, the Commerce Department said new housing starts grew 2.7% in October to an annual rate of almost 1.4 million. But the market shrugged off the figures after excitement about the imminent passage of the North American Free The Agreement ignited a Treasury market rally.

Yesterday's figures snuffed the upward trend, however. The latest employment report noted initial state unemployment insurance claims fell 20,000 to a seasonally adjusted 338,000 in the week ended Nov. 13. The Philadelphia Federal Reserve's index of manufacturing activity also increased.

The Standard & Poor's Blue List was nearly unchanged, falling $10 million to $1.65 billion from $1.66 billion Nov. 10. The forward calendar continued to shrink, as The Bond Buyer's 30-day visible supply was down $240 million to $4.83 billion from $5.07 billion last week.

The Bond Buyer's one-year note index fell nine basis points, to 2.64% from 2.73% last week.

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