The Federal Reserve's third rate cut in the last two months had little impact Tuesday on the market for bank bonds, which had already shifted into high gear after the earlier cuts.

The cuts create a more favorable lending environment for banks, but traders noted there was little buying of bank bonds this time around.

When the Fed cut short-term interest rates Sept. 29 and Oct. 15, investors snapped up bank bonds. Regional bank bond spreads-the difference between their yields and those of comparable Treasury securities-have tightened by 20 basis points in the last two weeks. The spreads on money- center banks have tightened by as much as 75 basis points in the same period.

Market experts said that investors in both the stock and bond markets had anticipated Tuesday's cut in the federal funds rate.

"The first two cuts have already made a positive impact on bank bonds," said analyst Stanley T. August of First Union Capital Markets of Charlotte, N.C.

Indeed, bank bonds have been among the hottest investments in the last two weeks. Aside from the rate cut, one of the key spurs to demand has been that "bank bonds were oversold to begin with," Mr. August said.

And investors have become bolder buyers as their concerns about the global economy have been eased.

Last Friday the International Monetary Fund struck a deal to give $41 billion of aid to bolster Brazil. Investors were also cheered by Japan's plans to shore up its languishing financial institutions.

"Everybody was clamoring for bank paper, and demand is likely to continue," Mr. August said. "This third interest rate cut is like manna for bank earnings."

Bank bond analyst John E. Otis of Bear, Stearns & Co. said that bank bond investors eventually will get around to buying more.

However, he warned that they still could encounter a volatile market.

Many issues in the international arena have yet to be resolved, Mr. Otis noted.

The United States' troubles with Iraq and political and economic turmoil in other countries could make investors sell their bonds, he said.

"Investors may also start taking profits," Mr. Otis said, "because the spreads on bonds have tightened so much."

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