A new element was injected into the bond market last week -- Iran. The uncertainties created changed a steadying market into a very nervous market. Prices continued to fluctuate in both directions as the week wore on.

With government dealers still owing many of the 10-year notes and long bonds from the refunding of 2 weeks ago, the market-place could ill afford declining prices. With the news of the embassy takeover in Iran, long Treasuries dropped 1 1/4 points.

Weekly figures released late Thursday showed the money supply had decreased again and its longer range growth was within the band set forth by the Federal Reserve. The market rallied that evening and again on Friday on the premise that further Fed restrictions would not occur soon. All sectors of the market erased their recent losses and posted sizeable gains.

On selling new issues nowadays, "momentum" is the key word. To market a new deal successfully you need a fast start or you are dead. If old momentum isn't going your way, you are in big trouble.

The municipal market found that out last week. Not that the Street does not already know about momentum, but bring a few successful deals and the investment bankers are inclined to get greedy and push the pricings of new issues.

Such was the case on three large issues last week: The $290 million state of Ohio Water Development Authority, the $45 million Maryland Department of Transportation and the $101 million state of Washington general obligation loans.

Of the three, the Ohio broke fast from the starting gate but stumbled in the backstretch. The serial bonds sold well but the $190 million term bonds were just too much for the market to digest even though they were priced to return 8.04 percent. The uncertainty of Iran also hurt.

Initially the other two issues didn't get out of the gate as they were overpriced and had few takers. Some bonds were cheapened by 10 basis points to facilitate trades in both accounts. But after the monetary figures were released, momentum returned to the municipal market and all these issues sold out and eventually traded at higher prices.

Of interest to tax exempt buyers this Thursday is the sale of $1.37 billion Housing project notes. The Department of Housing and Urban Developement wasn't able to sell any of these notes in October because of a 6 percent rate limitation. It doubled the size of the offering for November.

With the rate restriction now removed, these quality government backed notes which mature March through June of 1980 should return around 7 3/8 percent of tax exempt yield. They come in minimums of $25,000 and occasionally some are available in $5,000 denominations. Check your brokers for more detailed information.