Demand was mixed for nearly $3 billion of new deals priced yesterday and a Treasury rally improved the tone, but pushed secondary prices only marginally higher.

Before the horizon brightened later in the day, municipals opened with a weaker bias as market players worried that investors would shun the new issues unless the offerings were priced cheap.

The Street has been troubled by a distinct lack of investor demand this month, and traders feared a sell-off. But they were granted a reprieve yesterday, thanks to stronger government prices, which rose on good economic news.

The prospect that the Federal Reserve would tighten monetary policy was greatly diminished by a good consumer price report, which eventually spurred the Treasury 30-year bond to a record low yield of 6.55%.

CPI was unchanged in June, resulting from price declines in several categories of goods. Excluding food and energy, the core CPI inched up 0.1%. after a 0.2% increase in May.

Municipal tone improved with Treasuries, but enough new issues were priced cheaply to hold tax-exempt gains to 1/8 to 1/4 by session's end. High-grade yields were two to as much as three basis points lower.

Secondary traders reported some increased going-away business and balances from unsold portions of new deals began to diminish, but action was limited.

Several traders said that without the Treasury rally tax-exempts could have easily lost 1/2 point. They described price gains by saying bids were unchanged to up 1/8 point in spots, while offerings were up as much as 3/8 point.

In the debt futures market, the September municipal contract surged higher to settled up 11/32 to 102.22.

Despite the contract's strength and MOB buying by speculators, the spread widened to another record low of negative 417 from negative 400 Tuesday.

Short-term note prices, meanwhile, felt no positive effects from yesterday's action, traders said. Yields actually jumped as much as 20 basis points as a dearth of buyers left prices to wither.

New Deals

New-issue results were generally mixed yesterday and yields were lowered only slightly, while others deals were not repriced or cheapened.

Topping the negotiated sector, an 11 -member syndicate led by Merrill Lynch & Co. priced and repriced $1.1 billion of Puerto Rico Highway and Transportation Authority highway revenue and revenue refunding bonds.

At the repricing, the amount was boosted from $1 billion. Series X yields were lowered by three basis points in 2017, while Series X yields were lowered by three basis points in 2022, by five basis points in 2000, and by 10 basis points in 2001 and 2002.

The final offering included $300 million of Series W revenue bonds priced to yield 5.62% in 2013, 5.64% in 2015, 5.70% in 2017, and 5.72% in 2020. There was $539 million of Series X revenue refunding bonds priced to yield 2.85% in 1994 and from 4.95% in 2000 to 5.20% in 2002. Bonds from 1995 through 1999 were not formally reoffered to investors.

Finally, $138 million of Series X bonds from 2003 through 2010 were priced as FLOATS/RITES, while $124 million of Series W bonds were also priced as FLOATS/ RITES and MCS.

Moody's Investors Service yesterday affirmed its Baal rating, while Standard & Poor's Corp. rated the offering A.

Elsewhere in the primary market, a 37-member syndicate led by First Boston Corp. priced and repriced $600 million of Georgia general obligation bonds.

At the repricing, prices were raised to lower yields by five basis points in 1995, 1997, and from 2003 through 2007.

The final offering was made up of serial bonds priced to yield from 2.40% in 1994 to 5% in 2007.

The bonds are rated triple-A by Moody's and Fitch and AA-plus by Standard & Poor's.

Goldman, Sachs & Co. as senior manager of a five-member syndicate priced, repriced, and restructured $580 million of Salt River Project Agricultural Improvement Power District (Ariz.) refunding revenue bonds.

Yields were lowered by five basis points in 1994 and 1996, and a 2011 maturity was added to the scale.

Serials were priced to yield from 2.65% in 1994 to 5.55% in 2011. A 2013 term was priced as 5 1/4s to yield 5.57%; a 2019 term, containing $137 million, was priced as 51/4s to yield 5.62%; and a 2029 term was priced as 5s to yield 5.625%.

Bonds from 1994 through 2008 are noncallable. The managers said they expect double-A ratings from Moody's and Standard & Poor's.

Goldman Sachs also priced and repriced $246 million of Lincoln (Neb.) Electric System revenue refunding bonds.

Yields were lowered by five basis points from 1994 through 1999, and a 2011 maturity was added.

The final scale included serial bonds priced to yield from 2.65% in 1994 to 5.45% in 2011. A 2015 term, containing $62 million of the loan, was priced as 51/4s to yield 5.55%. The bonds are rated double-A by Moody's, Standard & Poor's, and Fitch.

Prudential Securities Inc. as senior manager priced and repriced $196 million of Broward County, Fla., Airport revenue refunding bonds.

Reoffering yields were raised by 10 basis points on Series D bonds from 1995 through 1998.

About $151 million Series C bonds were priced to yield from 4.20% in 1998 to 5.40% in 2009. There also was $45 million Series D bonds, subject to the AMT, priced to yield from 2.90% in 1994 to 4.40% in 1998.

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

Chemical Securities Inc. as senior manager priced $130 million student loan revenue refunding bonds for the New England Education Loan Marketing Corp.

The firm said it received the verbal award at the original price levels late in the day.

The issue included $26 million Series C bonds priced at par to yield 4.75% in 1998; $10 million Series D bonds priced at par to yield 4.75% in 1998; $58 million Series E bonds priced at par to yield 5% in 1999; and $36 million Series F bonds, subject to the AMT, priced at par to yield 5.625% in 2004.

The offering is rated single-A by Moody's and Fitch and A-minus by Standard & Poor's.

A sizable short-term note offering was also priced yesterday. Iowa sold $600 million tax and revenue anticipation notes, underwritten by a syndicate led by Goldman Sachs.

The notes were repriced to raise yields five basis points. The notes were priced with a coupon of 3.25% to yield 2.85%, due June 30, 1994.

The issue is backed by a letter of credit provided by a Union Bank of Switzerland-led syndicate and is rated MIG-1 by Moody's and SP-1-plus by Standard & Poor's.

Secondary Markets

Action was subdued in the secondary yesterday as most attention was focused on the primary sector. But traders said the improved tone helped to ease supply pressure in the secondary, which had been increasing because of the recent market malaise.

The Blue List of dealer secondary inventory rose $37.5 million, to $1.81 billion yesterday, but traders said it should decrease if the market holds onto its bullish tone.

At $1.81 billion, The Blue List is at its highest level since June 17, when it was $1.93 billion.

The Blue List has not been under $1.5 billion since June 7, when it was $1.44 billion and has not consistently been under the $1.5 billion mark since the period of May 4 through May 17.

In secondary dollar bond trading, prices were quoted up 1/8 to 3/8 point in spots.

In late action, New York LGAC 5 1/2s of 2018 were quoted at 5.69% bid, 5.68% offered; Fulton-DeKalb Hospital MBIA 5 1/2s of 2020 were quoted at 5.68% bid, 5.67% offered; and SCPPA MBIA 5s of 2022 were quoted at 925/8-3/4 to yield 5.51%.

Pennsylvania COP AMBAC 5s of 2015 were quoted at 93-1/4 to yield 5.55%; Orange and Orlando FGIC 5 1/2s of 2018 were quoted at 99-1/2 to yield 5.57%; and Washington Public Power Supply System MBIA 5.70s of 2017 were quoted at 99 1/4-1/2 to yield 5.75%.

Short-term yields bucked yesterday's upward trend and spiked five to as much as 20 basis points higher, traders said.

One trader said money market funds have not experienced the same flow of investor cash as is typical at the same time note issuance has increased. Yields have backed up as a result.

In late action, New York State notes were quoted at 2.48% bid. 2.45% offered and Wisconsin notes were quoted at 2.82% bid, 2.80% offered.

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