Prices are expected to remain in a narrow range, but yields will probably move slightly higher during the third quarter as heavy supply in both the tax-exempt and government bond markets keeps upward pressure on rates.

Although some economists are steadfast in their belief that the economy is still in a recession and that interest rates will be significantly lower at the end of the year, several traders argued Friday that this won't happen in the third quarter. New price lows will be tested before rates start going down again, they predicted.

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