Treasury Bond Futures Fall

Treasury bond futures soared to record-high prices Tuesday before collapsing in a wild trajectory some said was tied to violent moves in the oil market. The dramatic fall in oil prices has brought inflation ever lower and given extraordinary loft to Treasury bond futures, which hit a high on the Chicago Board of Trade of 104 17/32 points, surpassing the 103 23/32 record set shortly after the inception of trading in August, 1977.

“It was very much keyed off crude oil; that and technical factors,” said Richard Sandor, an analyst in Chicago with Drexel Burnham Lambert Inc.

At one point, the contract for delivery in June was 2 7/32 points higher than the previous close, but then collapsed, falling to 20/32 point below Monday’s price.

Aggressive retail buying early in the session tripped off technical buy orders that lifted prices to all-time highs, Sandor said. They went higher when oil broke below $10 a barrel, but plunged when oil prices rebounded.

Another analyst, Larry Morgan of Dean Witter Reynolds Inc. in Chicago, said that while traders had an eye on the oil market, T-bonds were brought to a frenzy primarily by technical factors.