Treasury prices were narrowly mixed late yesterday after drifting without conviction through a quiet trading session as the vigil for tomorrow's May employment report continued.

Late in the afternoon, the 30-year bond was 1/8 point lower and yielded 7.86%, while bill and short-term note prices were slightly higher on the day.

Traders and analysts said none of yesterday's economic news had much impact.

"All we did was chop around," said Matthew Alexy, a money market economist at First Boston Corp. "I think we're moving in a narrow range, getting to neutral ahead of the employment numbers."

Tomorrow's report on May employment, which will give the first comprehensive look at last month's economic activity, is expected to set the Treasury market's direction in the weeks ahead.

Treasury Market Yields

Prev. Prev.

Wednesday Week Month

3-Month Bill 3.77 3.76 3.66

6-Month Bill 3.97 3.95 3.84

1-Year Bill 4.25 4.18 4.18

2-Year Note 5.17 5.24 5.22

3-Year Note 5.72 5.80 5.86

4-Year Note 6.59 6.69 6.71

5-Year Note 6.59 6.72 6.72

7-Year Note 6.97 7.07 7.09

10-Year Note 7.33 7.41 7.46

15-Year Bond 7.62 7.67 7.70

30-Year Bond 7.86 7.89 7.95

Source: Cantor, Fitzgerald/Telerate

Although recent economic statistics like Monday's strong National Purchasing Managers' report have shown too much strength for the bond market's comfort, traders said the market is in good technical shape because there is not much supply around.

The next Treasury note auctions are not until the end of the month, and the quantity of available securities diminished more on Tuesday when the Federal Reserve bought notes and bonds for its own account.

Traders said dealers wary of having short positions because of the dearth of supply tend to turn around and buy replacements for securities they sell to their clients, which gives the market a firm tone.

Economists surveyed by The Bond Buyer on average expect a 95,000 gain in the May non-farm payrolls figure to be released tomorrow morning. Most predicted the unemployment rate will stay at 7.2%.

In a warm-up to the May jobs data, the Labor Department released its annual benchmark revisions to the payrolls statistics yesterday. As expected, the changes showed more jobs were lost during the recession than the government initially reported.

For example, between June 1990 and February 1992, 2.2 million jobs were subtracted from U.S. nonfarm payrolls, rather than the 1.6 million decline the government originally reported. As of March 1991, there were 640,000 fewer people working in the U.S. than had been reported earlier.

But analysts said that was old news, since Labor Department officials had already estimated the downward revisions to payrolls would total 650,000.

"At this stage of the business cycle, if you believe there is a recovery, looking back at history doesn't help you much," said Jerry Zukowski, an economist at PaineWebber Inc.

The market was not much more interested in yesterday's up-to-date numbers.

The 1.0% gain in April factory orders, which matched the consensus forecast, had no impact on security prices.

Car sales figures for late May were also in line with expectations, coming in at 6.5 million annual sales pace, down only slightly from the 6.7 million sales rate in mid-May.

Tom Webb, chief economist for the National Automobile Dealers Association, said the 6.3 million sales rate for the month of May was the highest in a year and a half.

Mr. Webb predicted that auto sales, up until now a "weak leak in the recovery" would continue to improve, leading to an increase in auto production in the third quarter.

In overseas trading, the Treasury market stood back from the fray that developed in European bond markets after Danish voters rejected the Maastricht treaty, which would have moved the 12 nations in the European Community closer to monetary and political union. In the wake of the Danish vote, French officials said they would submit the treaty to a referendum.

"Effectively, the Danish torpedoed [the treaty]," a London dealer said.

Smaller European sovereign bond markets whose values had risen in anticipation of a common European currency suffered losses, while German government securities benefited from a flight-to-quality trade.

Traders said U.S. Treasury prices were not affected by the hubbub, but some argued that Treasuries could benefit if European investors decided their funds would be safer in the United States.

The September bond futures contract closed unchanged at 99-10/32.

In the cash market, the 30-year 8% bond was 3/32 lower, at 101-12/32-101-16/32, to yield 7.86%.

The 7-1/2% 10-year note fell 1/32, to 101-1/32-101-5/32, to yield 7.33%.

The three-year 5-7/8% note was up 1/32, at 100-11/32-100-13/32, to yield 5.72%.

Rates on Treasury bills were lower, with the three-month bill down three basis points at 3.71%, the six-month bill off one basis point at 3.86%, and the year bill two basis points lower at 4.09%.

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