Washington - Inactivity permeated the Treasury market yesterday on the eve of the Federal Reserve's last scheduled monetary policy meeting of the year.

Carrying over the pattern of Friday, bills and most notes lost a little ground while bonds inched upward. Trading again was very light.

The benchmark 30-year bond was quoted up four ticks late yesterday at a price of 95 31/32, yielding 7.85%. The 10-year was unchanged at 100 13/32 with a 7.8% yield.

Meanwhile, bills fell for a second day, with yields on three-month and six-month maturities rising slightly to 5.73% and 6.53%, respectively.

The Federal Open Market Committee is due to meet today for the eighth and final time this year. It has raised short-tern interest rates six times since February.

Despite recent reports of strong holiday shopping and continued growth in manufacturing, the market reckons that Feb officials will wait for the new year before pulling the trigger on rates again, analysts said.

"That is the bet," said Marilyn Cohen, managing director of fixed income at L&S Advisors Inc. in Los Angeles.

The market has yet to show any sustained reaction to the ongoing middle-class tax cut bidding war in Washington. For now, the market is betting that Washington won't forget about deficit restraint, analysts said.

But bonds yields would probably rise significantly if the market decides otherwise, Cohen speculated.Treasury Market Yields Previous Previous Monday Week Month3-Month Bill 5.70 5.87 5.476-Month Bill 6.51 6.55 6.051-Year Bill 7.11 7.22 6.642-Year Note 7.58 7.63 7.203-Year Note 7.70 7.76 7.525-Year Note 7.76 7.81 7.797-Year Note 7.78 7.82 7.8910-Year Note 7.80 7.85 8.0030-Year Bond 7.83 7.91 8.12 Source: Cantor, Fitzgerald/Telerate Stats Stock Market: The Dow Jones IndustrialAverage fell 16.49 pointsyesterday, to close at 3790.70. Foreign Exchange: In late New Yorktrading yesterday, the dollar wasquoted at 100.10 Japanese yen and1.5728 German marks. Commodities: The CommodityResearch Bureau's index closed down0.21 point yesterday, at 231.85.

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