Short-term Treasury prices are expected to rise a little early this week as the Treasury dumps $51.5 billion of new bills and notes into the thin holiday market. The auctions begin with today's $24.8 billion of three- and six-month bills, followed by $15.5 billion of two-year notes tomorrow and $11.25 billion of five-year notes on Wednesday.

The market copes with bill auctions each week, and the two- and five-year note auctions are held every month and usually go smoothly. But traders said they are a little more worried about the note sales this month because activity has been so thin recently, with many participants sidelined for the holidays.

"We'll probably have to cheapen things up to get the auctions done, just because of the lack of activity, the lack of liquidity," a government securities salesman said.

A note trader agreed that prices will move lower ahead of the auctions. T think the Street will make a valiant effort to get these [two-years] behind 4.75%," the trader said.

Late Friday, the when-issued two-years were quoted at 4.70%, and the when-issued fives were bid at 6.08%.

Some market participants are worried that banks will be less interested than usual in the note auctions because they expect increased loan demand, but the note trader said that concern seemed premature.

"I don't think loan demand has picked up to the point where you're going to see a significant shift from Treasuries," he said.

Carol Stone, senior economist at Nomura Securities International, said she thought the increased size of the note auctions was more of a problem than any lack of bank buying. The Treasury boosted both the two- and five-year issues by $500 million from the amounts sold in November.

Analysts said the auctions would be the only event of interest this week. No one expects any change in monetary policy from tomorrow's Federal Open Market Committee meeting, and the November durable goods report is the only indicator likely to move prices at all, they said.

"The auctions notwithstanding, I think it will be a fairly uneventful week," said Anthony Karydakis, a senior financial economist at the First National Bank of Chicago. "Barring any major surprise with durables, I think we'll trade sideways. "

On Friday, Treasury note and bond prices ended unchanged to slightly lower after drifting lower in the morning, then edging higher in the afternoon.

Late in the day, the 30-year bond was 2/32 lower to yield 7.42% and note prices were unchanged to marginally lower.

Traders said activity was remarkably sparse and there was little rhyme or reason behind the session's price moves.

"Everything we see speaks of people squaring positions." a salesman said. "I don't see any activity of any significance."

The only bit of news Friday was an article in The Wall Street Journal in which President-elect Bill Clinton stressed his concern about the federal budget deficit.

Traders said that even though the article looked like good news for the market, it did not affect prices.

A note trader said participants were more interested at this point in action than words.

"He does seem to say the right things, but whether he practices what he preaches remains to be seen." he said. "Right now the market's got a wait-and-see attitude, and I don't think you're going to get any significant change until we see the first legislation or regulation that comes out of Washington."

While note and bond prices ended little changed Friday, bills posted gains. Traders said bills benefited from the soft fed funds rate and demand related to year-end window dressing.

"There's been a lot of buying." a bill trader said. "That's pretty much the whole story. "

The March bond futures contract closed 5/32 higher at 104[sup.9]/32.

In the cash market, the 7 5/8% 30-year bond was [sup.2]UF32 lower, at 102[sup.9]9UF32-102[sup.13]/32. to yield 7.42%.

The 63/8% 10-year note was unchanged, at 97[sup.11]/32-97[sup.15]/32, to yield 6.73%.

The three-year 51/8% note was off 2/32, at 9928[sup.28]/32-99[sup.30]/32, to yield 5.14%.

Rates on Treasury bills were higher, with the three-month bill up five basis points at 3.15%, the six-month bill up five basis points at 3.32%, and the year bill four basis points lower at 3.53%.

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