The action in the Treasury market so far this week could be summed up in a line from a song by Tom Petty and the Heartbreakers: "The waiting is the hardest part."

Government note and bond prices again drifted aimlessly yesterday as most participants remained on the sidelines ahead of this morning's release of the November producer price index.

"The market had very little tone to speak about," a bond trader said. "It was a pretty boring day."

By the end of yesterday's trading session, the Treasury's benchmark 30-year bond was quoted up almost 1/8 point to yield 6.15%.

During yesterday's morning session, most note and bond prices were lower, with the long end down as much as 1/8 point. Traders said the decline was due to higher gold, silver, and oil prices.

But by mid-morning the decline had stopped, and prices started to retrace their earlier losses.

"There were very few major price moves throughout the day," said a bond trader. "Everyone is waiting for the inflation news."

A survey by The Bond Buyer showed that economists are expecting a 0.2% increase of the total index and the core index, minus food and energy costs.

Most participants said these expectations have been mostly factored into the long end of the Treasury market, and if the inflation numbers come in significantly higher than expected, the price decline at the long end could be large.

"I look for producer prices to move a little higher than they did in October," said Sam Kahan, chief economist for Fuji Bank. "But even so, a 0.2% increase should be a positive for the market."

Kahan said the Treasury market's recent slowdown can be traced to two opposing forces.

"First, at the end of the year, traders become much more hesitant to take chances and lose money," he said. "Secondly, we all are starting to focus our attention on what is coming down the pike for 1994."

Kahan said as Treasury participants start looking ahead, they become less likely to trade on current economic news.

"If inflation remains in check, as we expect, we can look for the long bond to remain in the 6.10% to 6.30% range for the next few months," Kahan said.

He expects the long Treasury bond to be yielding around 6.50% by the middle of 1994.

"There is probably a greater downside to this number than upside," said Steven Ricchiuto, chief economist at Barclays De Zoete Wedd Securities Inc. "There are some economists that are expecting this figure to be in the negative territory, and that has also been priced into the market."

He said a reading over 0.2% could depress prices more than positive news could inflate Treasury prices.

Ricchiuto also said that the readings for January and February of 1994 will be a more important indicator for future inflationary pressures, as those months typically give a better reading of the economy.

Also this morning, the Labor Department releases the change in initial claims for unemployment benefits for the week ending December 4. For the week ended November 27, claims fell 17,000.

There was a dearth of important economic news yesterday, but the Labor Department reported that U.S. nonfarm business productivity rose 4.3% in the third quarter at a seasonally adjusted annual rate.

This was the largest increase for productivity since the second quarter of 1987. Nonfarm productivity fell a revised 0.4% in the second quarter of 1993.

This news did little to shake up the government market before today's inflation numbers.

Yesterday afternoon, the Federal Reserve released its "beige book" report on economic growth.

In it, The Fed reported that during November, consumer spending increased at a moderate pace, especially on such durable goods as automobiles and residential real estate.

The report, culled from research at the Fed's 12 regional banks, also says that inflation should remain favorable for the next year.

Although the report does not show a lot of new corporate hires, retail sales in Cleveland, Atlanta, and New York have steadily improved since late October.

The beige book is released before each of the year's eight Federal Open Market Committee meetings. The FOMC is scheduled to meet on Dec. 21.

In futures, the March bond contract ended down 1/32 at 116.04.

In the cash markets, the 4 1/4% two-year note was quoted late yesterday up 1/32 at 100.05-100.06 to yield 4.15%. The 5 1/8% five-year note ended up 1/32 at 100.05-100.07 to yield 5.07%. The 5 3/4% 10-year note was up 3/32 at 100.16-100.20 to yield 5.66%. The 30-year bond was also up 3/32 at 101.05-101.09 to yield 6.15%.

Rates on Treasury bills were down at the end of the New York trading session. The three-month bill was down two basis points to 3.08%. The six-month bill was down one basis point to 3.26%, and the year bill was also down one basis points to 3.43%. Treasury Market Yields Prev. Prev. Wednesday Week Month 3-Month Bill 3.12 3.12 3.126-Month Bill 3.34 3.27 3.271-Year Bill 3.54 3.45 3.402-Year Note 4.15 4.18 4.143-Year Note 4.45 4.50 4.515-Year Note 5.07 5.11 5.067-Year Note 5.21 5.32 5.2710-Year Note 5.66 5.76 5.6830-Year Bond 6.15 6.25 6.20

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