WASHINGTON -- Treasury bills were the big loser yesterday as the gove- government auctioned $17.3 billion of two-year notes and market participants grumbled about supply pressures at the short end.

By late yesterday three-month bills were yielding 5.17%, up to three basis points from the the day before, and six-month bills were yielding 5.74%, up five basis points.

The long bond slipped early but climbed back to about where it started the day, despite another strong housing report. Existing home sales were reported up 1% in September, erasing a 1% decline the previous month.

The long bond slipped early but climbed back to about where it started the day, despite another strong housing report. Existing home sales were reported up 1% in September, erasing a 1% decline the previous month.

The 30-year bond was quoted down a tick at 93 27/32 with a 8.05% yield; and the 10-year note was also down 1/32 at 95 27.32 and a 7.86% yield.

Analysts said the market as a whole has a downward bias it is unlikely to shake for the time bing. "The market is in terrible shape," said Eugene Sherman, director of research at M.A. Shapiro & Co.

The market was not particularly heartened by a favorable worker compensation report released yesterday, Sherman noted. The Labor Department reported that worker compensation grew by 0.7% in the third quarter. This is on the low side of a three-year trend, the department noted.

In addition, the bond market continues to keep its eyes on a weak dollar. "It's a self-reinforcing situation," Sherman said. The dollar pulls bonds down and bonds pull the dollar down, he added.

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