The yield curve added slightly to its steepening trend Friday, but the market featured narrow trading ranges expected to last throughout the holiday week.

The long bond finished the day down 3/32 to yield 7.97%.

Treasury market participants are expected to sit mostly idle through the Thanksgiving holiday, waiting for key indicators next week to help them decide where the economy might be headed.

Although there are two auctions on tap -- today's two-years and tomorrow's five-years -- supply is not considered much of a problem. And durable goods orders for October, which will be released Wednesday, are expected to continue showing a sputtering economy.

Since the market has had a steady diet of that sort of ambiguous economic data in recent weeks, price action is expected to remain subdued, holding tight to the steeper yield curve formed over the last few weeks.

Instead of paying attention to this week's data, next week's revision to the third quarter GNP figure will be awaited as a more important indicator,

Treasury Market Yields

Prev. Prev.

Friday Week Month

3-Month Bill 4.53 4.67 5.08

6-Month Bill 4.67 4.76 5.22

1-Year Bill 4.74 4.83 5.30

2-Year Note 5.47 5.48 5.93

3-Year Note 5-81 5.85 6.20

4-Year Note 5.91 5.93 6.35

5-Year Note 6.55 6.52 6.95

7-Year Note 6.99 6.93 7.34

10-Year Note 7.43 7.29 7.66

15-Year Bond 7.77 7.63 7.86

30-Year Bond 7.97 7.81 8.04

Source: Cantor, Fitzgerald/Telerate

according to Kathleen Stephansen, a money market economist at Donaldson, Lufkin & Jenrette Securities Corp.

But Ms. Stephansen said the most significant event next week will be Friday's employment report, because that is considered one of the next windows of opportunity in which the Federal Reserve Board might consider a further easing of short-term interest rates.

Hopes for that ease are lending support to the short end of the Treasury market, while the long end is viewing such a scenario with increasing discomfort, Ms. Stephansen said. Bond traders are leery of additional economic stimulants, which could become inflationary one the recession ends.

"The long end doesn't feel an additional ease will help the economy, and would just add liquidity so when we do get a recovery we'll have inflation," she explained.

Also reflecting that unease was reaction last week to any mention of economic revival packages from the Bush Administration.

For example, when rumors surfaced Thursday that President Bush was considering a plan to reward motorists who buy American-made cars with tax breaks, a sell-off began. Denials from the president gave only limited support back to the bond.

Another example worrisome to the bond market was talk earlier this month of a cap on credit-card interest rates.

"Any mention of these concepts inspires weakness in the long bond," one trader said, explaining that the proposals leave traders with the impression that the nation's political leadership has lost credibility on economic issues.

An announcement Friday that an economic growth plan from the nation's GOP leadership supported that analysis. The plan reportedly includes a capital gains tax cut as well as a cut in the middle class's tax burden. The bond sold off slightly on the midday announcement.

Traders agreed this week's activity is unlikely to show much life, unless there are surprising new initiatives from Washington or the stock market takes another drive.

The December bond future contract closed 5/16 lower at 99 4/32.

In the cash market, the 30-year 8% bond was 3/32 lower, at 100 4/32-100 8/32, to yield 7.97%.

The 7 1/2% 10-year note fell 1/4, to 100 11/32-100 15/32, to yield 7/43%.

The three-year 6% note was unchanged, at 100 14/32-100 16/32, to yield 5.81%.

In when-issued trading, the two-year notes to be sold today were offered at 5.47% and the five-years to be auctioned tomorrow were bid at 6.55%, about where they stood on Thursday.

Rates on Treasury bills were mixed, with the three-month bill down one basis point at 4.43%, the six-month bill unchanged at 4.51%, and the year bill also unchanged at 4.53%.

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