WASHINGTON -- The Treasury yesterday sold $16.1 billion of two-year notes at a yield of 3.94%, down from the 4.26% yield incurred in the previous auction on July 27 and the lowest since the record low 3.88% incurred in the April 27 sale.

The coupon rate was 3 7/8%, down from 4 1/4% in the previous auction. The price was 99.876.

In the Dutch auction, all competitive tenders at yields below 3.94% were accepted in full. Buyers who bid at the high yield of 3.94% were allotted 38% of their total bids. The median yield was 3.93%, and the low yield was 3.90%.

Tenders totaled $56.16 billion and the Treasury accepted $16.09 billion, including $804 million of noncompetitive bids.

Federal Reserve banks bought $955 million of the securities, as agents for foreign and international monetary authorities, in exchange for maturing securities. The Fed banks also bought $517 million for their own account in exchange for maturing securities.

The notes will mature August 31, 1995.

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