But she said that any such reduction in Treasury borrowings would be temporary and that borrowing needs would jump again in the third quarter.

That seemed to have caught investors by surprise, even though the growing government surpluses signaled that Treasury borrowing had to decline.

But traders and investors said the corporate market was helped by talk in the Clinton Administration of reducing long-term Treasury borrowing.

Looking ahead, securities dealers expect Treasury borrowings to contract as the budget deficit falls from the record $220 billion of the fiscal year 1986.

High among the factors they cite is the large volume of Treasury borrowings scheduled for the next three weeks.

This action to shorten the maturity of Treasury borrowing will produce real savings on interest costs over time.

The auction, the last Treasury borrowing of the week, produced an average discount rate of 7.68 percent, which was in line with market expectations.

Recent Evidence Recent evidence of the smaller deficit expected in fiscal 1987 was the Treasury borrowing estimates announced last week.

But, as long as the future cuts are solid, the pressure on Treasury borrowing and inflation will still be reduced.

Conservatives like that; it means that when massive Treasury borrowing is needed to send out checks to boomer-geezers, interest rates would probably be lower.