Treasury prices ended narrowly mixed in extremely thin trading yesterday as the market consolidated.

The 30-year bond ended down 3/32 to yield 6.21%.

A lack of fresh news gave participants few reasons to buy, sell, or trade securities. Volume was extremely light throughout the session as larger accounts stayed clear of market.

After a four-week rally, the market finally seems to have settled into its typical August trading pattern, traders said.

"We're in a shortfall of economic data," said Matthew Alexy, senior market strategist at First Boston Corp. "Given that environment, we're Just hanging out at current levels."

Fundamental and technical factors continue to underpin the market and participants see few obstacles in the way of lower yields. That is particularly true for the long bond, which continues to hold the spotlight, participants said.

But with little on the week's calendar of economic news, most expect prices to hold current ranges, with a downward bias. Traders said the market's lofty price levels may induce some accounts to take profits in thin trading.

However, buyers are waiting to purchase securities on downticks and therefore do not expect losses to be significant.

"Sellers are creating opportunities for buyers waiting in the wings," said Alexy. "The market won't fall far."

Modest declines at the long end yesterday continued to reflect the unwinding of basis trades. A basis trade is one in which players bet against the spread between the yield of the current issue and the yield of the off-the-run issue.

William V. Sullivan Jr., director of financial market research at Dean Witter Reynolds, said recent basis trades have focused on the roll between the new and the old cash bonds. In order to place a bet that the spread between the issues would widen further, participants last week sold the futures contract and bought the cash bond.

Sullivan said market players have switched course and are now positioning themselves for a narrower spread, which meant they sold the cash bond and purchased the futures contract. That activity allowed the futures market to outperform cash for the second session in a row.

This week the market will get a rationing of economic reports, including July durable goods orders, July existing home sales, and a reading on consumer sentiment from the University of Michigan.

Participants will pay close attention to these releases to see if fundamentals continue to support the market at current yield levels, traders said.

The market will bid on the first of the Treasury Department's monthly note auctions today. Market observers expect the sale of $16 billion in two-year notes to attract decent demand and have little impact on the market's longer-term outlook.

"The fact that the market is underwriting short-dated coupons has no bearing on the overall interest rate environment," said Sullivan of Dean Witter Reynolds.

Analysts expect the yield on the when-issued two-year note to back up to about 4% ahead of today's auction deadline to build more of a premium into the issue.

The three- and six-month bill auctions yesterday drew strong demand at average rates of 3.02% and 3.12%, respectively.

In futures, the September contract ended unchanged at 117.09.

In the cash markets, the 41/4% two-year note was quoted late yesterday down 1/32 at 100.18-100.19 to yield 3.92%. the 5 1/4% five-year note ended down 2/32 at 101.06-101.08 to yield 4.96%, the 6 1/4% 10-year note was up 1/32 at 101.02-101.04 to yield 5.60%, and the 7 1/8% 30-year bond was down 3/32 at 100.12-100.14 to yield 6.21%.

The three-month Treasury bill was up one basis point at 3.00%, the six-month bill was up one basis point at 3.12%, and the year bill was up one basis point at 3.29%.Tresury Market Yields Prev. Prev. Monday Week Month3-Month Bill 3.04 3.07 3.136-Month Bill 3.19 3.20 3.281-Year Bill 3.40 3.39 3.582-Year Note 3.92 3.94 4.173-Year Note 4.29 4.34 4.505-Year Note 4.96 5.02 5.217-Year Note 5.22 5.29 5.5510-Year Note 5.60 5.67 5.8930-Year Bond 6.21 6.29 6.67Source: Cantor, Fitzgerald/Telerate

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