More players reverse curve trades as Soviet coup turns into history.

Continuing Wednesday's trend, the long end of the Treasury market finished slightly higher yesterday afternoon, and the short end was off as investors abandoned curve-steepening trades.

Late in the day, the 30-year bond was up 1/8 point, to yield 8.04%.

"The troubles in the Soviet Union seem to have faded into the background," said Fred Leiner, a market strategist at Continental Illinois National Bank.

And as the attempted Soviet coup faded into history, participants continued to reverse moves they made earlier in the week in response to the political turmoil in the Soviet Union, in particular their

Treasury Market Yields

Prev. Prev.

Thursday Week Month

3-Month Bill 5.44 5.43 5.74

6-Month Bill 5.52 5.55 5.94

1-Year Bill 5.61 5.61 6.20

2-Year Note 6.22 6.27 6.85

3-Year Note 6.61 6.68 7.21

4-Year Note 6.76 6.84 7.35

5-Year Note 7.21 7.33 7.81

7-Year Note 7.57 7.64 8.04

10-Year Note 7.77 7.82 8.18

20-Year Bond 7.99 8.05 8.34

30-Year Bond 8.04 8.08 8.37

Source: Cantor, Fitzgerald/Telerate

curve trades, Mr. leiner said. "The people that didn't get out of their curve-steepening trades yesterday seemed to be getting out today."

Traders bet on a steeper yield curve by buying short-term paper and going short at the long end. When they reverse those trades by selling short-term securities and buying long-term paper, the long end benefits.

Flows were sparse, but traders said they had seen and heard of retail accounts moving money out the curve to pick up yield.

"It looks as if investors want to extend," a government bond trader said, adding that most participants are still waiting for the Federal Reserve to ease monetary policy.

It did not happen yesterday, though; analysts said the Fed's addition of reserves with four-day system repurchase agreements signaled monetary policy was steady.

Mr. Leiner said the market paid little attention to the weaker-than-expected jobless claims or money-supply statistics.

The Labor Department said yesterday morning new claims for unemployment insurance rose 22,000, to 430,000 in the week ended Aug. 10. The market had expected new claims to come in around last week's 408,000 level.

The government also said the number of people on state jobless rolls rose 6,000, to 3.309 million.

And late yesterday, a spokesman for the Federal Reserve Bank of New York reported at the weekly press briefing that there were declines in two of the three main measures of the money supply for the week ended Aug. 12.

According to the Fed, the nation's M1 money supply fell $5.3 billion, to $862.4 billion in the week ended Aug. 12; the broader M2 aggregate dropped $3 billion, to $3.4 trillion; while M3 rose $1.8 billion, to $4.2 trillion, in the same period.

Even though bill prices have come off the highs seen earlier this week, when the coup-inspired flight to quality was going strong, yesterday's Treasury auction of $12.5 billion year bills saw the lowest rate in almost five years.

The average rate on the year bill fell to 5.36%, the lowest since 5.33% on Aug. 28, 1986. At the auction last month, the 52-week bills yielded 5.88%

The September bond future contract closed 3/16 higher at 98 3/32.

In the cash market, the 30-year 8 1/8% bond was 5/32 higher, at 100 25/32-100 29/32, to yield 8.04%.

the 7 7/8% 10-year note rose 1/32, to 100 18/32-100 22/32, to yield 7.77%.

The three-year 6 7/8% note was down 1/32, at 100 20/32-100 22/32, to yield 6.61%.

Rates on Treasury bills were higher, with the three-month bill one basis point higher at 5.30%, the six-month bill up three basis points at 5.31%, and the year bill four basis points higher at 5.33%.

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