Investors in U.S. Treasury securities are operating in a different world now that the federal government is running, and is expected to continue running, large budget surpluses. Because of the surpluses, the total supply of Treasuries held by the public is shrinking. As a consequence, the Treasury announced last week that it plans next year to begin buying back some outstanding securities, most likely those with high yields and longer maturities. The purchases would be through auctions at which owners would voluntarily offer to sell them, usually at a premium. The buybacks would allow Treasury to increase the size of issues of new "benchmark" securities to ensure there is enough liquidity in the issues so they can be bought and sold readily.

Treasury also said that it will increase the size of weekly bill auctions between now and the end of the year to build its cash position in case of any unusual demands relating to the year 2000 computer problem. In addition, Treasury said it would not sell a new issue of 30-year bonds in November and in the future would have such sales only in February and August.

Tomorrow, Treasury will sell $8 billion each in three- and six-month bills, followed Tuesday by $15 billion in five-year notes, Wednesday by $12 billion in 10-year notes and Thursday by $10 billion in 30-year bonds. In when-issued trading Friday, the bills yielded 4.72 percent and 4.85 percent, the notes 5.89 percent and 5.98 percent, and the bonds 6.06 percent.