Treasuries were weaker in late-afternoon activity, as the longer-dated securities failed to hang on to earlier gains that came from this morning's relatively strong

consumer confidence report. Traders said the action was quiet ahead of Friday's employment report, which could signal the direction of the

Federal Reserve's next move.

On the short end of the Treasury market, the two-year note was lately down 2/32 to 99 13/32, with a yield, which moves in the opposite direction of the price, of 4.316%. The 10-year benchmark note dropped 5/32 to 96 2/32, raising the yield to 5.526%. The long bond, the 30-year Treasury bond, recently lost 5/32 to 93 4/32, yielding 5.866%.

"Data out this morning trapped a lot of people and brought them into selling," said Michael Cartine, a Treasury analyst at

IFR/Thomson Financial

, who identified the coming two-year auction as another reason for today's weakness in the shorter-dated securities. "It reduced perception of the Fed easing a little bit. But the data didn't really change the market's opinion."

According to the numbers released this morning, U.S. consumer confidence rose in May, as the

Conference Board's

index jumped to 115.5 from an upwardly revised 109.9 in April. The May reading was well above projections for a level of 111. Most of the strength came in the expectations component, which jumped to 86.8 from 79.1, a possible sign that the Fed's aggressive easing has encouraged U.S. consumers to keep up their appetites for spending.

Michael Cloherty, a market strategist at

Credit Suisse First Boston

, agreed that the market didn't have any sustained reaction to the consumer confidence index. "It was more a case that the market started to back up before the consumer report," he said. "It's now starting to tail off a little bit."

Bonds and notes have been trading in a narrow range in the last few weeks amid uncertainty about the present and future health of the economy. The short end of the market, which reacts most dramatically to expectations of monetary policy, has outperformed the long end, thanks to the Fed's five interest rate cuts since Jan. 3. But hopes for an economic recovery have been balanced by increasing concerns of inflation, as registered by the falling prices of the longer-dated securities.

"Trading today is rather quiet," Cloherty said. "The big announcement of the week is the employment report. That's clearly the focus here." Observers of the Treasury market believe the big news for this week is Friday's

nonfarm payrolls and unemployment data from the

Labor Department

. Also out Friday is the important

National Association of Purchasing Management's

purchasing managers' index for May, which will be telling about the state of manufacturing in the country. The Fed has indicated in the past that it is very concerned about the slowdown in manufacturing.

"If you look out to 2002, the market is pricing in some aggressive tightening out there," said Cloherty. "The market is basically saying we're not far from the end of the easing cycle, and it's going to turn into a tightening cycle very quickly. This Friday's employment report should really solidify market expectations of near-term policy and should also give some indication that the market could be overly worried about tightening in 2002."