Treasury notes and bonds muster a gain.

WASHINGTON -- Short covering and a well-received three-year note auction bolstered Treasury note and bond prices yesterday, analysts said.

"The market was a little bit oversold after a couple of tough days," said Matthew Alexy, a government trading strategist at CS First Boston.

Declining department and chain store sales in the week ending Nov. 5, according to the Johnson Redbook, also encouraged the market, noted Marilyn Schaja, money market economist at Donaldson, Lufkin & Jenrette Securities Corp.

Late yesterday, the benchmark 30-year bond was quoted up 14/32 at a price of 92 31/32, pushing the yield down to 8.12% from 8.17% on Monday. The 10-year note gained 11/32 to a price of 95 1/32, pushing the yield back below 8%.

Meanwhile, bills ended the session essentially unchanged after losing quite a bit of ground early in the day. Late yesterday, yields on three- and six-month bills were quoted at 5.38% and 5.89%, respectively.

Shorter-term notes also posted solid gains yesterday, Alexy noted. Two-year notes gained three ticks, knocking six basis points off the yield to 7.02%; and three-year notes advanced four ticks, shaving four basis points off the yield to 7.30%.

So far this week, the market seems to be in a holding pattern after strong economic news last week knocked the stuffing out of prices. pushing yields up 20 basis points on both ends of the yield curve, market watchers said.

The market still has to digest the 10-year note auction today and the October producer price report tomorrow, they cautioned. Treasury Market Yields Previous Previous Tuesday Week Month 3-Month Bill 5.35 5.20 4.996 Month Bill 5.87 5.74 5.511-Year Bill 6.32 6.21 5.962-Year Note 7.01 6.90 6.603-Year Note 7.28 7.14 6.915-Year Note 7.67 7.57 7.297-Year Note 7.82 7.73 7.4610-Year Note 7.97 7.89 7.6430-Year Bond 8.12 8.05 7.84 Source: Cantor, Ritzgerald / Telerate

Stats

Stock Market: The Dow Jones Industrial Average rose 21.87 points yesterday to close at 3830.74.

Foreign Exchange: In late New York trading yesterday, the dollar was quoted at 97.07 Japanese yen and 1.5088 German marks.

Commodities: The Commodity Research Bureau's index closed up 0.96 point yesterday at 233.97.

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