Treasury Bond Futures Soar

Treasury bond futures soared to their highest levels in 6 1/2 years Friday, reflecting the belief that the nation is in a period of very low inflation. The sharply higher T-bond futures marked the fifth consecutive day of advancing prices.

The contract for delivery in March at one point was 1 16/32 higher before settling at 88 7/32, up 1 13/32.

“It goes back to what we’ve seen in recent weeks with . . . the collapse of crude oil prices and weak commodity prices,” said Gary Dorsch, an analyst in Chicago with G. H. Miller & Co.

“Crude oil is a powerful deflationary force in the market,” he said.

The nation’s wholesale prices, as noted in the government’s producer price index, fell 0.7% in January.

“This was much sharper than expected,” Dorsch said, and provided further evidence of “the possibility of zero inflation.”

Dorsch said he believes the bond market can rally as high as 92.

Leaded gasoline futures moved higher, but crude and heating oil declined on the New York Mercantile Exchange.