Prices were quoted higher yesterday but action was light afraid of the holiday.
Municipals improved in tandem with the Treasury market yesterday as the credit markets continued to enjoy a positive tone, thanks to fewer worries about a strong fiscal stimulus package from Washington.
Tax-exempts have also benefited from the prospect of increased demand from massive Jan. 1 redemptions and various payments, and lighter supply.
Reflecting market strength, allotments were made to the Street from $1.8 billion of New Jersey refunding bonds sold last week.
In late secondary trading, the popular noncallable 6s of 201 1s were quoted at 99 1/2-7/8 to yield 6.04%. The bonds were originally priced to yield 6.07%.
"Trading was light but there is widespread optimism that rates will stick to this range or move lower," a trader said. "There isn't any argument for higher rates here, barring any unknown surprises. It makes you wonder, though, if that's precisely when something bad will happen."
By session's end, traders quoted the market unchanged to up 1/4 point on some bonds.
In the debt futures market, the March contract settled up 9/32 to 96.28.
Although forward supply has decreased for the moment - The Bond Buyer calculated 30-day visible supply at a paltry $2.34 billion - secondary supply has increased steadily over the last week.
Reflecting larger dealer holdings, The Blue List rose $45 million, to $1.94 billion yesterday.
The Blue List spiked $360 million, to $1.95 billion from 1.59 billion Friday Dec. 11, a 23% increase over five business days.
In follow-through business, Merrill Lynch & Co. freed $146 million of New York State Dormitory Authority state university educational facilities revenue bonds.
In late trading, the 6s of 2022 were quoted at 92 1/4-7/8 to yield 6.60%.
The bonds, original issue discounts, were originally priced to yield 6.60% last week.
Merrill Lynch & Co., senior manager for $72 million of Mississippi state general obligation capital improvement bonds, reported an unsold balance of $24 million.
Traders said activity was minimal ahead of the holiday, but the tone remained firm.
In secondary dollar bond trading, prices were quoted unchanged to up 1/4 point on average, traders said.
New York State Research and Development Authority AMT 6 3/8s of 2027 were quoted at 97 7/8-98 1/8 to yield 6.53%; Triborough Bridge and Tunnel Authority 6 1/8s of 2021 were quoted at 99-1/4 to yield 6.20%; and Metropolitan Pier Exposition Authority 6 1/2s of 2027 were quoted at 99 3/8-1/2 to yield 6.54%.
Massachusetts Bay Transportation Authority 6.20s of 2016 were quoted at 98 5/8-99 to yield 6.31%; Georgia MEAG FGIC 6 1/8s of 2014 were quoted at 98 1/2-3/4 to yield 6.25%; Denver Airport Authority AMT 6 3/4s of 2022 were quoted at 95 3/8-5/8 to yield 7.12%.
In short-term note trading, yields were as much as 10 basis points lower on the day.
In late action, notes of New Jersey, Pennsylvania, and Los Angeles were quoted at 2.20% bid, 2.10% offered.
Nebraska Power Bonds
The Nebraska Power Public Power District is planning to sell $340 million of revenue refunding bonds. The sale is scheduled for Jan. 26 through a syndicate led by First Boston Corp.