The market endured some corrective pressures yesterday, but the long bond managed to close the session at an all-time low yield.

The 30-year bond closed Up 9/32, to yield 6 09%, the lowest level in the 16 years the Treasury has conducted regular bond auctions. The long bond also reached this level last Thursday.

Treasuries saw both sides of recent ranges yesterday as prices fell sharply at the Opening and rebounded later in the session.

Selling pressures emerged early on a larger-than-expected revision to second-quarter gross domestic product. The release showed that the economic recovery was stronger than previously reported, and the recession was not as bad as analysts thought.

But the market recovered steadily throughout the session on the back of some weak economic data and a coupon pass by the Federal Reserve. Despite a few signs of strength in the GDP report, participants returned their focus on the weakness of the economy in the first half of this year and the belief that the strength of any pickup remains in question.

After all was said and done, traders concluded that selling yesterday was corrective in nature and cited the market's ability to' preserve recent gains in the face of bad news as proof that the rally is still on.

"The fact that we showed gains on the day indicates that the market is not embracing these figures as a sign the rally is over," said William V. Sullivan Jr., director of financial market research at Dean Witter Reynolds Inc.

The long bond outperformed the rest of the issues, While prices in the short and intermediate sectors of the curve meandered in extremely thin trading.

The long end of the market got a boost from a permanent addition of reserves by the Fed, as many participants speculated that the bulk of the purchases were for long-dated coupons. The announcement took most traders by surprise because most were expecting the purchases to take place in the bill sector, as demand for coupons was thought to be overheated by the recent rally. "I don't think people were set up for a coupon pass and we had some short-covering in the coupon sector after the announcement," Sullivan said.

The U.S. economy grew at a modest annual rate of 1.8% in the second quarter, up slightly from the 1.6% gain estimated last month, the Commerce Department said in a revised estimate.

While the revision to second-quarter gross domestic product came in a bit higher than the market expected, most economists agreed that the data still portrayed an economy struggling to stay afloat.

However, they said that the report contained enough signs of strength to allow the Federal Reserve to hold steady on monetary policy.

"This is the report [the Fed] needed to feel comfortable with steady policy," said Robert Brusca, chief economist at Nikko Securities.

The latest estimate was slightly higher than many analysts were expecting. The Commerce Department also released annual benchmark revisions for GDP dating back to 1990 showing that growth in the first quarter rose only 0.8%, up a notch from the 0.7% rise previously reported.

Philip Braverman, chief economist at DKB Securities, said the GDP revision did little more than support his view that the economy is still weak and that inflation remains well controlled. Braverman was particularly cheered by a downward revision to the implicit deflator component of the GDP report, which was estimated at 2.3% compared with 2.6%.

Kenneth T. Mayland, chief economist at Society National Bank in Cleveland, said the report was "surprisingly strong," but cautioned that the decline in final demand and increase in inventories are likely to sap strength out of the third quarter of the year.

That view was supported by a report on the Market News Service wire yesterday, that characterized Fed officials as uncertain about the economy. The report states that although the Commerce Department upwardly revised its estimate of overall. growth in the second quarter, considerable uncertainty remains about the pace of growth, for the remainder of the year, leaving the course of monetary policy in doubt.

Other economic data released yesterday included the Conference Board's measure of consumer confidence, which said sentiment remained weak in August, dampened by expectations for the next six months.

The business research organization's index dipped to 59.0 in August from a revised 59.2 in July. The board originally reported July's reading at 57.7. The index's cumulative loss since January totals 18 points.

The Purchasing Management Association of Chicago reported a marginal increase in its index for August to a seasonally adjusted 50.2 from 50.1 in July.

"The consumer confidence and Chicago purchasing numbers mirrored the market's view of the economy, which is weak," said Dean Witter's Sullivan.

The market is anxiously awaiting Friday's employment report, which will provide the market with its first comprehensive view of the economy's performance in August. Participants said the report will help the market figure out whether the rally will continue or if a correction is warranted.

The Public Securities Association recommended an early close on Friday of 1 p.m., eastern daylight savings time, for the government and mortgage securities market, money market trading in bankers' acceptances, commercial paper, and Yankee and Euro certificates of deposit.

In futures trading, the September contract ended Up 5/32 to 119.22.Treasury Market Yields Prev. Prev. Tuesday Week Month3-Month Bill 3.05 3.04 3.136-Month Bill 3.19 3.17 3.301-Year Bill 3.36 3.34 3.542-Year Note 3.85 3.84 4.153-Year Note 4.17 4.20 4.445-Year Note 4.78 4.86 5.177-Year Note 5.03 5.13 5.4410-Year Note 5.44 5.54 5.8030-Year Bond 6.09 6.19 6.55Source: Cantor, Fitzgerald/Telerate

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