Long-term Treasury bonds saw their earlier gains disappear yesterday afternoon when the Treasury's refunding announcement wiped out hopes of another cut in the bond auction.

Late in the afternoon, the 30-year bond was unchanged on the day and yielded 7.42%, after having been up as much as 1/2 point before the refunding announcement. Short-term and intermediate notes closed with some of the day's gains intact, with the 10-year up 1/8 point.

"Apparently a lot of people were betting there would be a cut in the bond auction size," said Michael Moran, chief economist at Daiwa Securities America. "When [the bond auction] was held steady, the market got hurt."

Traders said the rumors about the refunding package yesterday morning included talk that the government might not sell bonds at all next week. The rumors spurred speculative buying and short-covering during the morning, they said.

But yesterday afternoon, the Treasury said it will sell $10 billion of 30-year bonds next Thursday, exactly the same amount as it sold at the February and May refundings.

The sizes of the note auctions were also left unchanged. The government will sell $15 billion of three-year notes next Tuesday and $11 billion of 10-year notes next Wednesday.

The refunding package will raise $15.2 billion in new cash.

Late yesterday, then when-issued three-year notes were bid at 4.84%, the 10-year notes were bid at 6.62%, and the 30-year bonds were quoted at 7.37%.

Short-term and intermediate prices outperformed the long bond and closed higher on the day.

A note trader said the intermediate area was bolstered yesterday morning by money coming in from the mortgage-backed market. At the same time that the long end sold off on the refunding announcement, intermediate prices were hit when mortgage-backed dealers shifted to selling. But later in the day, the intermediates managed to bounce back, the trader said.

Earlier, in the day, the Federal Reserve's so-called beige book added to the market's gains because it painted a less rosy picture of the economy than the previous report which came out in mid-June.

The beige book "was a bit somber," said Jerry Gluck, a Fed watcher at Mitsubishi Bank.

Instead of talking about the improvement in the economy, "they stressed the unevenness of the recovery," Mr. Gluck said, adding that on the whole, the report "sounded rather weak and certainly not inconsistent with more Fed easing."

Traders said Federal Reserve Chairman Alan Greenspan's somewhat downbeat comments about the economy during the afternoon were also a small positive for the market.

Mr. Greenspan described the recovery as "minimal" in testimony before the Senate Banking Committee and told the committee the federal budget deficit was impeding the economy's comeback.

Payrolls Forecasts Rise

Wall Street economies boosted their forecasts for tomorrow's July nonfarm payrolls figures after a story on the Knight-Ridder Financial News wire service discussed the impact a federal program to provide summer jobs for teenagers would have on the number.

Some traders yesterday had not heard about the revisions, and others said the change in forecasts had little impact on Treasury prices.

In June, Congress passed legislation providing an extra $500 million for the Job Training Partner ship Act, which provides funding so local governments can give summer jobs to teenagers. The $500 million was in addition to the original $682 million of funding.

According to Jeff Aragon, budget officer for the Employment Training Administration, the funding is expected to add 414,000 jobs to the 565,000 normally produced by the program.

Mr. Aragon said he thought "a good portion" of the additional jobs would show up in the July nonfarm payrolls figure.

Wall Street economists seemed to agree. Ian Borsook, a senior economist at Merrill Lynch, said the firm had boosted its payrolls estimate to 210,000, up from its original forecast of a 85,000 increase. And Mr. Moran of Daiwa is now calling for a 275,000 rise in July payrolls, up from his former estimate of a 125,000 gain.

But economists said that the improvement in payrolls will be temporary and will have a limited impact on the overall economy.

"By definition, the summer employees will be gone by September," said Matthew Alexy, an economist at First Boston Corp.

"I don't think the extra jobs we'll get because of the jobs program will be meaningful," Mr. Moran said. "In terms of the income generated and the stimulus provided, it will have a relatively small impact on an economy of our size."

Analysts said the market would pause to filter out the impact of the summer jobs program when the employment report is released tomorrow.

"We're advising people to chuck out the government portion entirely and just look at private nonfarm employment," said Frederick Sturm, senior economist at Fuji Securities. Private nonfarm payrolls fell 142,000 in June, he added.

Today, the bond market will focus on the weekly jobless claims, which are expected to shoot higher as the result of General Motors' company-wide shutdown in July.

A General Motors spokesman said more than 200,000 of the company's hourly employees may be eligible for unemployment benefits as a result of the two-week shutdown. Economists expect the workers to show up on the state jobless rolls over the next four weeks.

The claims for the week ended July 25 to be reported this morning could total anywhere from 450,000 to 575,000, analysts say, up from the 400,000 new applications filed in the week ended July 18.

The September bond futures contract closed 2/32 higher at 105 10/32.

In the cash market, the 30-year 8% bond was unchanged, at 106 22/32 - 106 26/32, to yield 7.42%.

The 7 1/2% 10-year note rose 5/32, to 106 8/32 - 106 12/32, to yield 6.60%.

The three-year 5 7/8% note was up 1/8, at 102 31/32 - 103 1/32, to yield 4.69%.

Rates on Treasury bill were mixed, with the three-month bill down one basis point at 3.17%, the six-month bill unchanged at 3.26%, and the year bill two basis points lower at 3.40%.

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