Jefferies money market economist......>

US TSYS/BILLS: Jefferies money market economist Thomas Simons said today's

3-month and 6-month bill auctions both drew "soft buyside demand".

- "The 3-month bill auction stopped with a 1 basis point tail at 1.050%, same as

last week," he said. "This is the highest yielding 3-month bill since July 31st.

Last week's poor auction was understandable since the maturity date was awkward

(Dec.28th) and would have forced investors to redeploy proceeds right ahead of

yearend. This bill bridges yearend and yet the stats were almost as bad.

Something else must be at work, but it doesn't stick out as something obvious."

- He adds "the 2.89 bid cover equals last week as the lowest since July 24th.

Indirect bidders took down 22.9%, which is just above last week's but still

below average. Directs took down 7.1%, which is close to average. Dealers took

down 70%," their "biggest takedown since May 1st."