Last week, new three-month, six-month and one-year Treasury bills surged to new highs. On an average coupon equivalent basis, these bills came at 11, 11.04 and 10.88 percent, respectively.

At times like these in a bear market, dealers carry little if any inventory because the rate of interest they must pay on borrowed funds to carry these securities is higher than the interest they can earn on the securities themselves. This is referred to in the trade as a "negative carry."

If any legitimate buying interest develops in this climate, it is quite easy to "run" the market since dealers are making offerings of bonds they do not own and they do so buy pushing the offering prices higher to protect themsleves.

For those investors who prefer high returns and wish to keep their funds invested in short-term instruments, a six-month unit investment trust was marketed last week with an 11.34 percent annualized current return. The trust was made up of the prime certificates of deposit and the units were sold to the public at a cost slightly above $1,000 per unit.More of these trusts are sure to follow.

Since many people are worried about inflation and are afraid to invest in bonds beyond 5 or 10 years, attractive options are available.Currently the yield curve is invested, which means that higher returns are available in the shorter maturing from six months to three years.

Consequently investors may put together their own portfolios of taxable or tax-free securities at usually high returns.

The only shortcoming in such a strategy is that if inflation is significantly curtailed over any length of time, the investor would miss locking up high, long-term yields by having purchased short maturities. Investors should decide what is the best plan to fit their own particular needs.

On a coupon equivalent basis, six-month Teasury bills return 10.82 percent while two-year Treasury notes return 10.02 percent.

In the tax exempt market, yields are available on short-term notes from 5.60 percent in six months, to 6 percent in one year and 6 1/2 percent in two years.