Treasury Bond Futures Fall

Treasury bond futures plunged steeply Friday after the Federal Reserve Board cut the discount rate but then rallied to close higher for the day. In extremely volatile trading, prices were up nearly 2 full points over the session’s low.

The Fed announced a lowering of the discount rate from 7.5% to 7% about the same time that new civilian unemployment figures showed the largest gain in the jobless rate in nearly six years.

Analysts said both events were ultimately supportive to the bond market.

Treasury bonds settled 5/32 to 24/32 higher with the contract for delivery in March at 94 29/32 points.

Oil futures collapsed after a minor rally the last couple of days. Prices opened higher on the New York Mercantile Exchange but turned lower on profit taking and trade selling, said Peter Beutel, an analyst in New York with Rudolf Wolff Energy.

Crude oil settled 82 cents to 88 cents lower with the contract for delivery in April at $12.28 a barrel; heating oil was 1.55 cents to 2.73 cents lower with April at 45.33 cents a gallon.