Municipal prices ended the week unchanged to 1/8 point higher in a few spots in what traders said was a day of generally lackluster activity.

The summer malaise set in early on Friday. After a bit of a price drop during the morning, the market quieted before noon, and not that much was accomplished during the remainder of the session, traders said.

At one point during the day, the September municipal futures contract was as much as 10/32 lower, but by the end of the day the contract had settled at 101 10/32, down 5/32 from Thursday's close. The MOB spread widened to negative 454 from negative 452 Thursday.

Municipal participants expect prices to stay in a fairly narrow range this week ahead of Friday's July employment report.

In June, the unemployment rate rose 0.1 percentage point to 7.0%, and non-farm payrolls rose a measly 13,000.

For July, most participants expect jobs to increase by 175,000 to 200,000, and the rate of unemployment to be unchanged.

Also this week, the Treasury Department will announce on Wednesday the size of its quarterly refunding. The promise of forward government supply may serve to keep that market in check this week, but the market's upward bias is expected to hold.

"There are also a lot of people beginning their summer vacations this week," said a New York-based trader. "There just is not that much incentive to sell or buy bonds right now.

The trader said the market had a firm underpinning alt the end of the week, though, helped by a favorable slate of economic numbers.

Even though June new home sales rose a stronger-then-expected 11% and the May figure was revised to down 12% from down 21%, both the Chicago Purchasing Managers' Report and the June personal income figure continued to suggest slow growth.

"The economy seems to take a step forward and a half step back," the trader said. "There's some improvement, but it's very slow and discouraging."

A relatively heavy slate of deals were priced last week, but supply looks to be a bit lighter this week, although 30-day visible supply rose on Friday.

For the next 30-days, visible supply, as measured by The Bond Buyer, was up $2.11 billion, to $6.61 billion.

Leading the negotiated calendar are issues of $1.2 billion of Philadelphia, Pa. water and wastewater revenue bonds priced by a group led by Smith Barney, Harris Upham & Co.; $210 million of Pennsylvania Housing Finance Agency Fannie Mae collateralized revenue bonds priced by a group led by Alex. Brown & Sons; and $143 million of Charlotte, N.C. convention center revenue bonds to be senior managed by PaineWebber. Inc.

In competitive action, the only large deal scheduled for this week is the sale of $175 million of Illinois general obligation bonds.

In short-term action, New York City is expected to sell $1.1 billion of revenue anticipation notes on Tuesday.

Last week, Standard & Poor's Corp. rated the notes SP-1 and Moody's rated them MIG-1.

On Thursday, the Philadelphia school district will sell $190 million of tax and revenue anticipation notes.

The notes are rated SP-1 by Standard & Poor's, MIG-1 by Moody's Investors Service, and F-1 by Fitch Investors.

Dealer supply as measured by Standard & Por's The Blue List fell $34.1 million on Friday, to $2.04 billion.

Nassau's Now Rating

Nassau County, N.Y., on Friday received an A-minus rating on the uninsured component of its outstanding GO debt. The rating, which covers $429 million of GOs. marks Standard & Poor's first assessment of the county's debt.

The rating did not cover two separate bond sales on Thursday, when the county issued competitively $63.66 million in unlimited tax general improvement bonds, and $10.77 million in unlimited tax combined sewer district bonds. Both issues carried insurance and were rated triple-A.

Moody Investors Service, the other ratings concern that assess Nassau's GO debt, rates the county's bonds Baa. While Moody's has no rating equivalent to Standard & Poor's A-minus, the Standard & Poor's rating is at least one step stronger in credit quality than Moody's Baa grade.

"The rating reflects the county's substantial and diverse tax base, very high income level, moderate debt burden, and weakened financial position," Standard & Poor's said in a press release. Nassau is expected to end its fiscal year with a $30 million accumulated deficit on a $1.6 billion budget, said Richard Marino, a director at Standard & Poor's. Marino termed the deficit "manageable."

In October 1992, Moody's shocked and angered Nassau County officials by slashing its rating on county debt, two notches, to Baa from A. Moody's attributed the downgrade to the political impasse that developed over a deficit-reduction plan.

Former county Treasurer John V. Scaduto said that the two-notch reduction was not "justified by either the county's economic situation or its current financial condition."

Scaduto, who is now the county's bond counsel with Nixon, Hargrave, Devans & Doyle, said on Friday that the county sought a rating from Standard & Poor's to improve the market perception of its credit, and to lower borrowing costs.

Scaduto said the stronger Standard & Poor's rating when compared to Moody's will save the county significantly on the cost of obtaining credit enhancement. He also said that the county may pursue a bond rating from Fitch investors Service.

Secondary Markets

Traders reported another dull day, with no large blocks of bonds out for the bid.

In late action, PICA MBIA 5 5/8s of 2023 were quoted at 5.78% bid, 5.76% offered; New York LGAC 5 1/2s of 2018 were quoted at 5.81% bid, 5.78% offered.

Puerto Rico 5 1/2s of 2019 were quoted at 5.74% bid, 5.72% offered; and Salt River 5 1/4s of 2019 were quoted at 5.72% bid, 5.70% offered.

In short-term note trading, yields were mostly unchanged in very quiet trading.

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