Tax-exempts rallied in concert with the Treasury sector yesterday, pushing yields on three of The Bond Buyer's indexes to record lows.

The market opened with a firm tone and managed gains of 1/4 point by midsession. Treasury prices spiked more than one point late in the afternoon, and municipals followed in the distance with bonds closing up as much as 3/8 point.

"The technicals are great, the economy looks terrible and Fed Chairman Alan Greenspan was on the tape," one trader quipped. "It's a bull market. Things are so bad all you can do is buy bonds and eat chicken fat."

The Bond Buyer's revenue index sank six basis points to 6.84% on the week yesterday, the lowest since its creation in 1979. The 40-bond index yield to maturity fell seven basis points to 6.77%, the lowest since its creation in 1985, and the one-year note index fell to 3.76%, down 16 basis points on the week, to its lowest level since its creation in 1989.

The bulls turned out in the primary sector yesterday, where dwindling supply has allowed underwriters to increase new issue prices.

Lehman Brothers tentatively priced and repriced $248 million Union County, N.J. Utilities Authority solid waste system revenue bonds to lower yields five basis points, except in 2006, where the yield was lowered by two basis points.

The order period was terminated by late morning and a Lehman Brothers officer reported the deal done on priority business to mostly bond funds.

"It's not a repeat issue and they've been working on it for five years," the officer said. "We got what we felt was an aggressive price and it's a nice piece of paper."

The final scale included $228 million series A bonds, subject to the federal alternative minimum tax, priced at par to yield from 6.75% in 2001 to 7% in 2004. Term bonds in 2006 were priced at par to yield 7.10%, 7.15% in 2009, and 7.20% in 2014, which contains $111 million of the loan.

There also is $21.4 million series B bonds, which are taxable municipal securities, priced as 8.95s at par in 2001.

The bonds are rated A-minus by Standard & Poor's Corp. and A by Fitch Investors Service. The issue is not rated by Moody's Investors Service.

Meanwhile, secondary trading was steady during the session and traders reported good business to permanent investors as well as Street trading.

"The market is active and very impressive right now," said the head of one trading desk. "The Street is giving every indication it wants to be long, even through the quiet period. There hasn't been any distressed selling and it remains very firm."

Technically, the Street is light on bonds as the record deluge at year-end found permanent investors.

The Bond Buyer's 30-day visible supply totaled $1.5 billion yesterday, while Standard & Poor's Blue List fell $82 million to $1.2 billion.

In addition, the fundamentals remain favorable, and the market got a boost when initial state unemployment insurance claims rose 79,000 to a seasonally adjusted 493,000 in the week ended Dec. 7.

The Treasury market picked up speed going into the close of the futures market and municipals managed 1/2 point gains on the contract.

In the debt futures market, the March contract settled up 16/32 to 95.20. The March MOB spread widened to negative 200 from negative 187 the previous session as governments outperformed municipals.

In secondary dollar bond trading, Denver Airport 7 3/4s of 2021 were quoted at 98-1/2 to yield 7.88%, Port Authority of New York and New Jersey 6 1/2s of 2021 were quoted at 97-1/4 to yield approximately 6.70%, and New Jersey Tunpike Authority 6 1/2s of 2016 were quoted at 99 5/8-1/4-1/2 to yield 6.54%. Pennsylvania Turnpike 6 1/2s of 2013 were quoted at 98 1/2-5/8 to yield 6.62%.

Short-term note yields finished strong with yields dropping about 10 basis points on average.

In late secondary trading, California Rans were quoted offered at 3.20% as were Los Angeles Trans and Texas Trans. New York City Rans were quoted at 4.92% bid, 4.80% offered, and New York State Trans were quoted at 4.50% bid, 4.40% offered.

Negotiated Pricings

An issue of $ 37 million Louisiana GO refunding bonds for savings assistance for future education program was priced by Smith Barney, Harris Upham & Co.

The offering included serial bonds priced to yield from 5.70% in 1996 to 6.60% in 2004.

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

First Fidelity Securities Group as senior manager tentatively priced $35 million Hoboken, N.J. fiscal year adjustment GO bonds, qualified pursuant to the provisions of the municipal qualified bond act.

The offering included serial bonds tentatively priced to yield from 5.10% in 1994 to 6.70% in 2011.

The bonds are backed by Financial Securities Assurance Inc. and triple-A rated by both Moody's and Standard & Poor's.

A Correction

Yesterday's Municipal Market column misstated the rating status of New York City's general obligation bonds that are insured by Financial Security Assurance Inc. The bonds are rate triple-A by both Moody's Investors Service and Standard & Poor's Corp.

Wednesday's Municipal Market column incorrectly stated the senior manager on the sale of $143 million California Educational Facilities Authority revenue bonds for Stanford University. San Francisco-based Prager McCarthy & Lewis served as senior manager.

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