Bulls suddenly turned bears late yesterday and a spate of selling pushed prices down 1/4 point overall, leaving the market in a precarious position.

The municipal market opened with a firm tone as strong investor demand for a short supply of bonds continued to encourage the bulls. The positive psychology prevailed during the morning session as dealers who missed price jumps earlier in the week chased after bonds. But later in the afternoon, Treasury traders, disappointed that the Federal Reserve failed to intervene, sold bonds.

The taxable selling continued through the Treasury auction and the tone turned increasingly sour as the day progressed. In the tax-exempt market, many traders said they found themselves owning paper at the highs, sparking nervous selling late in the session.

At the close, prices were quoted down 1/8 to as much as 1/2 point for off-the-run names as the bid-side weakened, traders said. Highgrades were quoted down as much as 3/8 point.

"The market is incredibly fragile," a Wall Street-based trader acknowledged. "The music faltered today and everybody's scrambling for a chair. Guys who thought they were buying into strength suddenly found themselves at the top looking down."

In the debt futures market, the June municipal contract settled down 12/32 to 95.24 and the June MOB spread narrowed to negative 172 from negative 174 the previous session.

Meanwhile, new issues were priced mostly at aggressive levels with good results, although the market's reversal of fortune could affect follow-through business.

Leading negotiated new-issue activity, a syndicate led by Stifel, Nicolaus & Co. priced $634 million Oklahoma Turnpike Authority bonds.

Late yesterday, a representative from the underwriting team of Stifel, Nicolaus said the firm was meeting with the authority on a proposed repricing with lower yields.

The tentative offering included $388 million series 1992 A first senior bonds priced to yield from 4.35% in 1994 to 6.40% in 2007. A 2012 term and a 2015 term were priced to yield 6.375%, a 2020 term, containing $102 million of the loan, was priced to yield 6.527%, and a 2022 term was priced to yield 6.375%.

About $21 million of series 1992 B secnd senior bonds were priced to yield from 4.35% in 1994 to 6.40% in 2007. A 2012 term was priced to yield 6.50% and a 2022 term was priced to yield 6.55%.

There was $200 million of series 1992 C subordinated bonds priced to yield from 4.25% in 1994 to 5.85% in 2002. A 2015 term was priced to yield 6.375% and a 2022 term was priced to yield 6.43%. Capital appreciation bonds were priced to yield from 5.95% in 2003 to 6.35% in 2009.

Approximately $17 million of series 1992 D first senior bonds were priced to yield from 4.35% in 1994 to 6.40% in 2007. The 2012 and 2015 term bonds were priced to yield 6.375%, a 2020 term was priced to yield 6.55%, and a 2022 term was priced to yield 6.375%.

Finally, $9 million of series 1992 E subordinated bonds were priced to yield from 4.25% in 1994 to 5.85% in 2002. A 2015 term was priced to yield 6.375% and a 2022 term was priced to yield 6.43%. Cabs were priced to yield from 5.95% in 2003 to 6.35% in 2009.

The series A bonds are rated A by both Moody's and Standard & Poor's, except for the 2012, 2015, and 2022 maturities, which are insured by AMBAC Indemnity Corp. and are triple-A rated by both agencies. The series B bonds are rated A by Moody's and A-minus by Standard & Poor's. The series C,D, and E bonds are insured by the Municipal Bond Investors Assurance Corp., and triple-A rated by both agencies.

In other action, Morgan Stanley & Co. priced and repriced $227 million of Sikeston, Mo., electric system revenue refunding bonds.

The yields on bonds in 2022 was lowered by about two basis points.

The final reoffering scale included serials priced to yield from 3.50% in 1993 to 6.35% in 2007. A 2010 term was priced to yield 6.341%; a 2012 term was priced to yield 6.429%, and a 2022 term was priced to yield 6.45%.

The bonds are insured by MBIA and triple-A rated by both Moody's and Standard & Poor's.

Wheat, First Securities Inc. priced $158 million of Richmond Metropolitan Authority, Va., expressway revenue and refunding bonds.

The offering included $91 million series 1992-A bonds priced to yield from 3.30% in 1993 to 6.25% in 2006. A 2008 term was priced as 6s to yield 6.30%, a 2016 term was priced as 6-3/8s to yield 6.415%, and a 2022 term was priced as 5-3/4s to yield 6.399%.

About $55 million series 1992-B bonds were priced to yield from 4.25% in 1994 to 6.25% in 2006. A 2012 term was priced to yield 6.372% and a 2022 term was priced to yield 6.448%.

Finally, there was $11 million of taxable revenue and refunding bonds priced at par to yield 7.80% in 2002 and 8.40% in 2013.

The issue is insured by the Financial Guaranty Insurance Co. and rated triple-A by Moody's, Standard & Poor's, and Fitch Investors Service.

In competitive action, $156 million City and County of San Francisco, Calif., unlimited tax various purpose bonds, was won by a Bank of America group with a true interest cost of 6.0895%.

The firm reported an unsold balance of $43 million late yesterday.

The offering included serials priced to yield from 3.25% in 1993 to 6.30% in 2012. The bonds are rated Aa by Moody's, Standard & Poor's, and Fitch.

Secondary Trading

There were some sizable blocks of bonds trading in the secondary yesterday, and market players reported several large customer lists out for the bid during the afternoon.

Traders said that the bid-side had weakened enough that a seller faced losses of as much as 1/2 point. Activity died down as market players hit the sidelines.

In secondary dollar bond trading, prices were generally quoted down 1/8 to 1/4 point.

San Antonio Water Authority 6-1/2s of 2010 were quoted at 99-3/4-100 to yield 6.52%, New York State Power Authority 6-1/4s of 2023 were quoted at 97-3/4-7/8 to yield 6.41%, and South Carolina PSA 6-5/8s of 2031 were quoted at 99-1/2-5/8 to yield 6.66%.

In the short-term market, traders reported a quiet trading day with most investors watching the progression of the new deals in the primary sector.

Late in the day, California Rans 3-1/4s were quoted at 3.65% bid, 3.60% offered: Los Angeles Trans 5s were quoted at 3.65% bid, 3.63% offered: Pennsylvania Tans 5-1/4s were quoted at 3.60% bid, 3.55% offered: and New York State Trans 3.65s were quoted at 3.43% bid, 3.40% offered.

Negotiated Pricings

Bear, Stearns & Co. priced $77 million of Broward County School District, Fla., GO refunding bonds.

Serial bonds were priced to yield from 3.40% in 1993 to 6.35% in 2007. A 2008 capital appreciation bond was priced to yield 6.55%.

The issue is rated Al by Moody's and the managers expect Standard & Poor's to rate the bonds AA-minus.

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