The chill running through the Treasury market may put some new high-grade corporate issues on ice.

"People are really spooked over the Treasury market," one syndicate source said. While he expects postponements this week, the source declined to name specific deals but said he knew of "a couple."

A second syndicate source said: "There are no rumored deals right now with the market as weak as it is."

Treasury market prices fell Friday as the October employment report arrived showing slightly more strength than expected.

The Labor Department reported that non-farm payroll employment gained 177,000 last month, while forecasts ranged from gains of 150,000 to 165,000.

The civilian unemployment rate inched higher to 6.8% in October, from 6.7% in the previous month.

The report also showed manufacturing payrolls increasing for the first time in eight months with a gain of 12,000 jobs. Of that, 9,000 came from the automobile sector. Average hourly earnings also rose to $10.92 from $10.87. Average weekly earnings jumped to $376.74 from $373.93, a gain of $2.81.

"It's another indication that the economy is growing, and I think the market has gotten fat and happy because it always seems to be getting bad news," said David Blitzer, chief economist at Standard & Poor's Corp. The market has received a string of good economic news lately.

"I think it's been an unsettling week," Blitzer said. Investors dislike good economic news because they fear inflation will result and diminish the value of their fixed-rated securities. But Blitzer doesn't see much to worry about.

"The strength of the economy is probably a little bit overdone," he said. Blitzer,said he thinks yields on both the Treasury's 10-year notes and 30-year bonds are close to the top of their ranges.

Some of the Treasury market's weakness could also be attributable to jitters over next week's refunding, Blitzer said.

In the junk bond market, several issues are expected this week, high-yield sources said.

Methanex Corp. is expected to offer $300 million of senior secured notes due 2001 through lead manager CS First Boston on Tuesday.

Coca-Cola Bottling Southwest is seen offering $140 million of senior subordinated notes 10-year through lead manager Citicorp Securities Inc. on Monday. Citicorp is also expected Monday to bring $125 million of a 10-year deal for Coca-Cola's sister company, Texas Bottling.

Casino America is expected to price $100 million of first mortgage bonds due 2001 though Salomon Brothers Inc. Navistar Financial Corp. is expected to offer $100 million of senior subordinated notes due 1998 through J.P. Morgan Securities Inc. as lead manager early next week. The notes will be noncallable.

In secondary trading Friday, spreads on high-grade issues ended marginally tighter across the board. Junk prices ended mixed to down point. Kaiser Aluminum debt was among the losers.

Reliance Group Holdings sold a two-part offering totaling $650 million. The first tranche consisted of $400 million of 9% senior notes due 2000 at par. The noncallable notes were rated Ba3 by Moody's Investors Service and BB-plus by Standard & Poor's Corp. The tranche was increased from $350 million.

The second piece consisted of $250 million of 9.75% senior subordinated notes due 2003 at par. Noncallable for five years, the notes were rated B1 by Moody's and BB-minus by Standard & Poor's. The tranche was decreased from $300 million. Donaldson, Lufkin & Jenrette Securities Corp. was lead manager.

Armco Inc. came to market with $125 million of 9.375% senior notes due 2000 at par. Noncallable for five years, the notes were rated B1 by Moody's and B by Standard & Poor's. Salomon Brothers was lead manager.

Federal Home Loan Banks issued $100 million of 5.32% notes due 1998 at par. Noncallable for two years, the notes were priced to yield 20 basis points more than comparable Treasuries. Smith Barney Shearson was sole manager on the offering.

Standard & Poor's downgraded Bowater Inc.'s senior debt to BBB-minus from BBB and preferred stock to BB-plus from BBB-minus. The rating agency also affirmed its A-3 rating on the company's commercial paper.

About $1 billion of debt is affected.

"Ratings for Bowater are lowered due to weaker than expected earnings and cash flow prospects over the near to intermediate term," Standard & Poor's said in a release.

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