WASHINGTON - The treasury yesterday sold $15.18 billion of two-year notes at an average yield of 4.29%, down from 5.11% yield incurred in the previous auction on June 23 and the lowest since the Treasury began a regular two-year note auctions in 1974.

The coupon rate was 4 1/4%, down from 5% in the previous auction. The average price was 99.924.

The Treasury received $42.23 billion of bids for the notes and accepted $15.18 billion in a range from 4.27% to 4.29%, including $1.14 billion of noncompetitive bids at the average return. The Treasury accepted 74% of the bids at the highest return.

The Treasury sold an additional $528 million to Federal Reserve banks as agents of foreign and international monetary authorities and $1.18 billion more to government accounts and Federal Reserve banks for their own accounts in exchange for maturing securities. The additional notes were sold at the average price.

The notes will mature July 31, 1994.

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