''Now, short maturities have a close to seven per cent yield. Some 60 per cent of issues this year have maturities of up to four years,'' Mr Lim said.

Even in March, as yields soared, there were $1.8 billion of new Hong Kong dollar bond issues. All but one of the issues was three years or less.

In April, a further $1.6 billion of fixed-rate paper was issued, with one five-year bond, one seven-year and nine three years or less.

Much of the action in those months was generated by European and Japanese banks looking for funds for local applications.

Floating rate issues have shown signs of dominating a jittery Hong Kong market, the most recent example being Hang Seng Bank's $1.5 billion certificate of deposit and the dearth of major offerings by the territory's corporates since US interest rates began to swing upwards.

Meanwhile, bond prices in Hong Kong have begun a minor recovery following rallies in New York and London.

Dealers have been hoping for a clear signal for the direction of the bond market from non-farm payroll figures due to be released in the US last night.

''In general, Hong Kong follows the US on rates,'' Mr Lim said.

The US market has been rallying for two days with the five-year Treasury Bill selling at US$99.18 on Wednesday, par on Thursday and $100.11 yesterday.

In Britain, government gilts yields have dropped sharply. Data from Bloomberg Business News said the 2017 Gilt, the longest maturity available, had dropped 33 basis points to yield 8.43 per cent, the lowest since February last year.

The British rally was a factor in falling US yields, according to Mr Lim, but he said he believed there had been Federal Reserve buying in New York.

''The word on the market is the Fed was buying quietly,'' he said. ''Everyone is now waiting for the payroll figures. We expect unemployment to remain steady at 6.4 per cent, and the market will not react negatively unless the increase in payrolls is above 300,000.'' A stronger rally could be provoked if figures fall short of expectations.

''Less than 250,000 and bonds will recover,'' Mr Lim said.

Hong Kong sentiment was still far from bullish, but it was not necessary for investors to be bullish to make money.

''We are also now looking for currency gains,'' he said. ''For three months we have had a decline; we are moving parallel now.'' Christopher Nicholas, senior vice-president at Lehman Brothers, said: ''Nothing outperformed, but prices followed New York's lead.

''Some people have been taking profits; others have been more positive. A good piece of news from New York was that there were some violent sell-offs, but prices closed where they opened.

''That is a positive sign; there is some resilence.''