Was last week's big rally in the bond market a "bear market rally" or was it the real McCoy? Or was it simply St. Patrick and his leprechauns working some of their magic on the beleaguered market?

Whatever it was it was glorious even though the market gave back some of its gains by Friday.

If you will recall, the short money market securities began to rally in the beginning of March, taking their cue from the declining federal funds rate (the rank banks charge for the use of their excess reserves).

By Friday a week ago, long Treasuries began moving up price too. Early last week it was announced that housing starts had declined 25 percent during February, and the bond market exploded in all maturities. What's bad for the economy is good for the bond market.

The rationale behind such a move was that the economy was slowing, or even flattening, or perhaps recession (a bond owner's dream), which would all result in a lessening demand for money and hoepfully a reduction in the inflation rate.

The municipal market showed the most dramatic gains. From recent poor sales of high-grade general obligation issues, about $300 million unsold bonds were listed in the dealers' inventory journal, the Blue List. The demand for these bonds in the 15-to-20-year range was startling. Fifteen-year State of New Jersey's were sold with 70 basis points less yield than when they were first offered, up 5 1/2 points or $55 a bond. The 20-year New Jerseys were 90 basis points lower in yield, up 8 points or $80 a bond.

Since early March, long Treasuries are up about 8 1/2 points with 3 1/2 points coming during the week. The Treasury sold a new two-year issue with an average return of 12.65 percent on Wednesday.

The $600 million telephone issue sold out when it was priced to return 13 1/4 percent. However, almost half of the issue was sold to overseas purchasers. A total of $1.3 billion corporates sold well during the week.

The Treasury will offer a four-year note on Tuesday and a 20-year note on Thursday. Both will come in miminum denominations of $1,000.

The Federal Farm Credit Banks are offering four issues to be priced on Tuesday. The six- and nine-month issues will be available in minimums of $5,000. The three- and five-year issues will come in minimums of $1,000. These issues will be available in book entry form only -- no physical delivery. Consult your local broker for more information.