Late yesterday, the outstanding two-year issue was trading at a price to yield about 7.30 percent.

Early talk in the market is that yields may need to increase on the two-year issue to attract investor interest.

The two-year issue was sold at a high yield of 6.17 percent, higher than the 6.167 percent traders had expected.

Yesterday the two-year issue closed higher to yield 4.78 percent.

Note sales next month will be limited to another round of two-year and five-year issues.

Market participants said that foreign interest in the two-year issue was tepid.

Both issues and today's two-year issue were originally scheduled last week.

Even though the yield is well below that offered on overnight Federal funds, traders said they expected strong demand for the two-year issue.

The two-year issue will be auctioned tomorrow and the five-year on Wednesday.

Over all, when-issued trading in the two-year issue was about 44 percent better than normal.