Proft taking pushed some tax-exempt prices 1/8 point lower Friday, but market players were optimistic as the market ransacks supply and prices trend higher.

Just over $12 billion of new deals was priced over the last two weeks and the market has held in well, with yields falling about 10 to 15 basis points on average last week.

Both Treasury and municipal traders took profits Friday, pushing some tax-exempts down 1/8 point.

In the debt futures market, the September municipal futures contract settled down 7/32 to 95.10.

Issuers continue to rush to market, taking advantage of the gradual drop in interest rates and cash-laden investors, who are set to receive up to $10 billion from July 1 bond calls.

Economic news continues to be light, leaving market players to luxuriate in superior technicals as demand outweighs supply.

Prices have not broken out of a range that was established weeks ago, but the market tone remains firm and traders reported good business flow last week.

"The market has a very strong tone to it, and even though prices haven't changed all that much, municipals have often outperformed the Treasury sector," acknowledged James L. Kochan, head of research at Robert W. Baird & Co. "Ethusiasm is high in anticipation of the July 1 bond calls, and issuers are trying to take advantage of that."

But some market players warn that the amount of bond call money reinvested may be less than anticipated.

"People may have gotten a little bit carried away," Mr. Kochan said. "Everybody gets geared up for this and then it proves disappointing. It will be interesting to see how supply is received, and whether deals will be priced to aggressively."

The market will take on about $3.8 billion of new deals this week, according to preliminary figures compiled by The Bond Buyer Friday.

The negotiated sector features $448 million of Houston public improvement refunding bonds, to be priced by Goldman, Sachs & Co.; $423 million of New Jersey Highway Authority senior parkway revenue refunding bonds, to be priced by Lazard Freres & Co.; and $150 million of Osceola County, Fla., transportation improvement revenue bonds, to be priced by Merrill Lynch & Co.

The competitive sector is relatively light, dominated by $403 million of Pennsylvania GO bonds, slated for sale Wednesday.

The short-term note sector features several sizable offerings, including $450 million of Wisconsin, 11 1/2-month 1992 operating notes, to be sold competitively; $400 million of California 1992 revenue anticipation notes, also to be sold competitively; and $200 million of Riverside County, Calif., tax and revenue anticipation notes, to be priced by First Boston Corp.

Traders reported moderate trading activity with relatively few bid-wanteds or trades.

In follow-through business, Goldman Sachs, senior manager for $146 million of Clark County, Nev., Power co. industrial development revenue bonds and pollution control refunding revenue bonds, freed the issue from syndicate restrictions.

In secondary dollar bond trading, prices were unchanged to 1/8 point lower, traders said.

In late action, New York City Water Authority AMBAC 6.20s of 2021 were quoted at 97 1/8-3/8 to yield 6.42%, Triborough Bridge and Tunnel Authority AMBAC 6 1/4s of 2012 were quoted at 98 3/4-99 1/4 of 2012 6.36%, and Greater Orlando Aviation Authority AMT 6 3/8s of 2021 were quoted at 98-3/8 to yield 6.52%. South Carolina PSA 6 5/8s of 2031 were quoted at 98 1/2-3/4 to yield 6.73%, California 6 1/4s of 2012 were quoted at 98 1/4-3/4 to yield 6.40% and Oklahoma Turnpike Authority MBIA 6 1/4s of 2022 were quoted at 98 1/8-3/8 to yield 6.39%.

New York City

On Friday, Standard & Poor's Corp. assigned its highest short-term rating, SP-1 plus, to New York City's offering of $700 million of tax anticipation notes series A, slated for competitive sale this week, and due April 14 1993. The notes are secured with city tax revenues.

The agency said the rating reflects "the strong projected cash flow of the city, and early impoundment of property taxes for their payment, prior to the april maturity."

The agency also rated SP-1 the city's $700 million of revenue anticipation notes series A, due June 30, 1993. The Rans are secured with state aid payments, and the agency said the city received the lower rating on these notes because the city is "still subject to potential delays if the state budget is late."

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