The bond market staged a powerful relief rally last week after a report that consumer prices were unchanged last month and Federal Reserve Chairman Alan Greenspan indicated that while the Fed may raise short-term interest rates later this month, the increase might be the only one for a while. Reinforcing the relief about inflation after the 0.7 percent jump in prices in April, Greenspan said he sees no sign that inflation is about to get worse. He is concerned, however, that economic growth at 4 percent is still too fast to keep labor markets from becoming ever tighter and eventually causing inflation problems. A 3 percent growth rate would be about right, he suggested.

Tomorrow Treasury will sell $7.5 billion each in three- and six-month bills, followed Tuesday by $10 billion in one-year bills and Wednesday by $15 billion in two-year notes. In when-issued trading Friday the bills yielded 4.72 percent, 4.98 percent and 5.04 percent and the notes 5.80 percent.

TREASURY

FRIDAY

WEEK AGO

YEAR AGO

Three-month bill

4.65%

4.74%

5.18%

Six-month bill

4.97%

5.07%

5.33%

One-year bill

4.98%

5.12%

5.41%

Two-year note

5.56%

5.68%

5.52%

Five-year note

5.73%

5.91%

5.54%

10-year note

5.83%

6.02%

5.50%

30-year bond

5.98%

6.14%

5.70%

SOURCE: Bloomberg News