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GOVERNMENT DROPS 30-YEAR BONDS

The government announced today it was eliminating the 30-year Treasury bond even as a top Treasury official acknowledged for the first time that the government may run a deficit not only this budget year but also in 2003 as well.

The 30-year bond soared on the news. In afternoon trading, it rose 3 1 3/1 6 point, or $38.13 per $1,000 in face value, to yield 4.98 percent, down from 5.20 percent on Tuesday. Prices and yields move in opposite directions.

The government began selling 30-year bonds on a regular basis in 1977, but the security over time has lost its benchmark status and demand for it has declined, diluting its effectiveness as a financing tool for the government.

Against that backdrop, the Treasury Department said it would no longer auction the 30-year bond. More than $600 billion of the bonds have been issued to the public.

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