With yields sitting near one-month lows, the Treasury market has surrendered most of the gains it made on friendlier-than-expected economic reports when trading began.

Some market participants are attributing the lack of enthusiasm to the approach of quarter-end and the simultaneous end of the Japanese fiscal year.

"Players and dealers are hampered from taking on new positions by quarter-end pressures -- window-dressing and such -- so the reaction has been fairly tepid on really good news," said Marcello Frustaci, trader at

Daiwa Securities America

.

The benchmark 30-year Treasury bond was lately up 5/32 at 96 16/32, its yield falling 2 basis points to 5.48%. But it was up as much as 14/32 shortly after 9 a.m. EST, in the wake of the release of two key economic reports.

The February

Consumer Price Index

, a broad inflation measure, advanced a slender 0.1% overall, in line with the average expectation of economists surveyed by

Reuters

. The core CPI, which excludes volatile food and energy prices, also rose 0.1%, a tenth less than the consensus estimate. Core CPI was contained by surprisingly large declines in auto and tobacco prices,

High Frequency Economics

chief U.S. economist Ian Shepherdson noted in a comment to clients.

The other report, January

international trade

, detected a significantly wider-than-expected trade deficit for the month, which will place a drag on first-quarter

gross domestic product

. The trade deficit widened to a record $17.0 billion from a revised $14.1 billion in December as exports fell 1.4% and imports rose 2.0%.

The market's failure to hold onto its initial gains is "actually bearish, because we're getting good news and we can't seem to bounce," Frustaci said.

The calendar isn't the only thing hampering the market. There's also hesitation related to the huge corporate bond that

AT&T

(T) - Get Report

is slated to issue next week. The company has announced its intention to issue $5 billion to $6 billion of securities (though it hasn't announced what kind, traders expect the deal to include five-, 10- and 30-year issues). But public filings through January allow the company to issue as much as $13 billion, in what would be the largest-ever corporate bond issue.

MCI WorldCom

(WCOM)

is the current record-holder, with a $6.1 billion deal sold last August. The loud buzz about the issue is an indication of strong demand generally for corporate issues as opposed to Treasuries, said John Atkins, senior analyst at

Thomson Global Markets

.

And on top of all that, the Treasury market sits at a nearly one-month high at a time when oil prices have been rising (the April contract traded on the

New York Mercantile Exchange

is up another 40 cents today, nearly, at $15.43 a barrel, its highest price since Oct. 12) and the economy is strong. "It's a real critical time," Frustaci said. "The market has been calling for a weaker economy for something like 10 quarters, and it's not happening. Maybe the Fed is going to have to start thinking about doing something."