What was going on when I was born?

Prices advanced and yields fell sharply on both short- and longterm Treasury securities yesterday in one of the most buoyant markets in weeks. Many long-absent institutional investors were the most eager buyers as they perceived yields topping out. The resultant desire to lock in current yields carried over into the corporate debt and tax-exempt markets, where prices were also marked up sharply. In the stock market, prices moved broadly higher in heavy trading, spurred by the news of a tentative plan to settle the battle over the Federal budget deficit. The Dow Jones industrial average rose 8.75 points, to 863.20. (Page D6.)

Governor Carey yesterday ordered a state investigation of corruption in the building and construction industry. The inquiry will include public hearings and focus on purported organized-crime influence and racketeering, the effect of corruption on public building projects and the effectiveness of law enforcement, the Governor said. Mr. Carey credited a recent series in The New York Times on corruption in the industry with bringing public attention to the problem. He said the investigation would be conducted by the State Commission of Investigation.

In its first use of the new shelf-registration process, the American Telephone and Telegraph Company is selling 2 million newly issued shares of common stock for $110.8 million to Morgan Stanley & Company, the company announced late yesterday. Morgan Stanley, which for years has underwritten most A.T.& T. stock offerings as the company's traditional investment banker, competed for the offering and finally won with a bid of $55.40 a share, A.T.& T. said. It did not identify the other bidders.

After a period of watching awkwardly while his aides negotiated with Congressional leaders on the budget, and then following with a volley of partisan denunciation of Democrats, President Reagan has burst into the open this week with a series of startling accommodations. In part, his moves were a product of months of efforts to reach accomodations on issues deemed essential to key voting groups. Such was the case in the White House's endorsement of a proposed constitutional amendment to permit organized school prayer, a bill to curb the courts' power to order busing for desegregation, a modified ''new federalism'' proposal to transfer programs to the states and a compromise on the extension of the Voting Rights Act. In part, as well, Mr. Reagan's actions, especially on the budget, were forced by events beyond his control and by a situation in which his own advisers feared he appeared to be foundering publicly in his own partisanship and obstinacy.

A new laser procedure has proved highly effective in treating the leading cause of newly developed cases of blindness among the elderly, the National Eye Institute reported today. The results are so promising that the institute took the unusual step of disclosing them at a news conference to spread the word quickly. It has also terminated further clinical tests and today urged all potential patients to seek the laser treatment promptly. The nonsurgical treatment, which takes 10 minutes, is almost useless if not applied within a few weeks of the onset of symptoms. The disease, called senile macular degeneration, can cause loss of vision when tiny blood vessels grow into and displace the macula, the thumbtack-sized structure that controls central vision in the retina.

AMERICAN 19th-century sculpture has lagged quite some way behind American 19th-century painting in terms of current esteem. When the American Wing was opened at the Metropolitan Museum, for instance, American painting stayed the course very well, but a lot of people thought that the American sculpture on view looked soapy, derivative and second-rate. As to that, it is perfectly true that American sculpture got away to a dull start. How could it have been otherwise? American painting had its full share of American energies, even if those energies took a little time to find their best expression. American architecture had great models - and great sponsors, too, from Thomas Jefferson onward. Meanwhile, the energies inherent in American folk or vernacular sculpture were outlawed in high art, and American sculpture was expected to come from nowhere and hold its own with the work of European neo-classical masters like Canova and Bertel Thorwaldsen. It was an impossible situation.

At 10 o'clock yesterday morning, the New York Futures Exchange began trading in stock index futures. Amid shouts and frantic armwaving in a pit lined with stylish electronic equipment, James McManus of MKI Securities bought two June contracts in the New York Stock Exchange composite index from Bradley Jordan of Merrill Lynch at 68.00 apiece. With this trade, the New York Futures Exchange opened new ways for speculators and investors alike to play the market, and joined the Kansas City Board of Trade and the Chicago Mercantile Exchange in the hotly competitive business of trading stock index futures. ''It's the entire Big Board market of 1,525 common stocks in one decision -to buy or to sell,'' declared John M. Blin, senior vice president of the N.Y.F.E, of the new contract.

International Britain accused Argentina of ''intransigence'' in announcing that the effort by Peru and the United States to arrange a cease-fire in the Falklands dispute had collapsed. Meanwhile, London's Defense Ministry disclosed it had lost two more jets in the South Atlantic conflict, further reducing the British flotilla's meager air power. (Page A1, Column 6.) Argentina repeated its demand that it be granted sovereignty over the Falklands. Britain has repeatedly rejected the demand. (A14:1-2.)

''I have never believed that the oft-quoted amendment was supposed to protect us from religion.

The Reagan Administration, breaking its long silence on Congressional efforts to limit the jurisdiction of the Federal courts, gave its blessing to an antibusing bill today. But it warned that a bill to remove the Supreme Court's jurisdiction over school prayer was probably unconstitutional and, in any event, unwise. The Administration transmitted its views to Congress in letters from Attorney General William French Smith to the chairmen of the Senate and House Judiciary Committees. Members of Congress, which is considering more than 30 bills to limit the Federal courts' jurisdiction over so-called social issues, have been pressing the Administration to take a stand for more than a year.

In an historic widening of the powers of savings and loan associations, the Government agency that regulates the units authorized them today to offer investment and brokerage services to their customers. The surprise action by the Federal Home Loan Bank Board immediately raised questions about the Congres@sionally mandated separation of the banking and securities industries, and it drew fire from trade groups representing commercial banks and securities firms. In Congress, Richard L. Still, staff director of the House subcommittee on financial institutions, said he was disturbed by the move because it came at a time when Congress was trying to make a judgment on issues House Democrats cleared the way for legislation to subsidize mortgages for home buyers, helping the housing industry. Page D2. related to the Glass-Steagall Act of 1934, which bars commercial banks from entering Wall Street's traditional territory of corporate securities underwriting and stock brokerage. There is debate, however, over whether the law applies to savings and loan associations and mutual savings banks, collectively known as thrift institutions.

The New Jersey Senate today approved a bill that would reinstate the death penalty for some types of murder. The measure now goes to the Assembly, where it is expected to receive quick approval. The Senate vote was 31 to 5. Governor Kean has promised to sign the bill. His predecessor, Brendan T. Byrne, declared the state's old capital-punishment law unconstitutional in 1972 as a judge and then vetoed death-penalty bills twice as Governor.