The Bond Buyer's yield indexes dropped modestly this week, pushing two of them to record lows, as reports showing an ailing economy fueled a rally in the fixed-income securities markets.

The revenue bond index dropped seven basis points, to 6.86% from 6.93%, and is now at its lowest level ever since it began on Sept. 20, 1979.

The average yield to maturity of the 40 bonds used in the Municipal Bond Index fell three basis points this week, to 6.85% from 6.88%. The yield is the lowest since The Bond Buyer began calculating it in January 1985.

The 20-bond and 11-bond indexes of general obligation bonds fell four basis points apiece, to 6.69% and 6.56%, respectively, from 6.73% and 6.60% a week ago. This ended a three-week string of increases in the indexes, which had hit their lowest levels in more than four years on Oct. 3.

Municipal bond prices rallied along with the U.S. Treasury market this week, as reports on gross national product and consumer confidence indicated that the U.S. economy is still sputtering, which lessens the chances that the Federal Reserve Board will raise interest rates to control inflation. The bell-wether 30-year Treasury bond yield fell 11 basis points this week, to 7.90% from 8.01%.

The municipal market's rally was dampened somewhat by a heavy calendar of new issues and by investors shying away from yields that dropped to unattractive levels. The 30-day visible supply of new issues has run well over $3 billion since Oct. 15, and The Blue List total of bonds in dealers' inventories hovered around the $1.4 billion mark during the week.

In the short-term market, The Bond Buyer's one-year note index fell 28 basis points, to 4.42% from 4.7%.

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