Treasuries, the leading safe-haven investment, are solidly higher this morning chiefly on jitters about the latest turn of events in


war on Yugoslavia.

According to Russia's


news agency, Moscow will expel NATO's representative in protest of the bombings, which entered their third day today. And

Russian Foreign Minister Igor Ivanov

said his country will send humanitarian aid to Yugoslavia. NATO is bombing Yugoslavia after its leaders refused to sign a peace pact stopping Serbian aggression against ethnic Albanians in the province of Kosovo.

"The rally in Treasuries is occurring mostly because of the Kosovo situation," said

Lehman Brothers

economist Joel Kent. "Now there's another wrinkle in the situation with Serbia, which is how does Russia feel about it?

"Not that we're overly concerned at this juncture," he hastened to add.

"There's a lot of concern about what's going on with Russia," concurred John Canavan, Treasury market analyst at

Stone & McCarthy Research Associates

in Princeton. "When that news hit the tapes it was a factor behind the drop in gold, the rise in the dollar and the fresh rise in Treasuries."

The benchmark 30-year Treasury bond was lately up 22/32 at 95 26/32, dropping its yield 5 basis points to 5.54%. Shorter-maturity note yields were likewise about 5 basis points lower.

While today's drop in gold prices and rise in the dollar are related to the Balkan situation, they also support Treasury prices because both are disinflationary indicators. The dollar, the world's safe-haven currency, was lately up nearly two yen to 120.09, its best level since March 9, and had clobbered the euro down to a fresh all-time low (since the European single currency came into existence on Jan. 1) of $1.07.

As for gold, Canavan said the price was falling on "vague, speculative rumors that Russia is going to start selling gold to raise cash for any effort to support the Serbs." The country, he noted, "doesn't have much else."

And as if the Treasury market couldn't rally on its own today, the


helped out with a coupon pass at about 9:40 a.m. EST, buying about half a billion of securities maturing from 2019 to 2021. In a coupon pass, the Fed buys Treasuries on the open market, injecting liquidity into the banking system in order to keep the fed funds rate on target.

Needless to say, the market was easily overcoming the latest rise in oil prices, triggered by a fire at



Richmond, Calif., refinery. The May crude oil futures contract traded on the

New York Mercantile Exchange

was lately up 26 cents at 15.93, a near-six-month high.