T-Bond Futures Rise Limit

Treasury bond futures ended a three-day decline Tuesday, advancing the limit allowed for a day’s trading on the Chicago Board of Trade.

The collapse of a mini-rally in crude oil and the belief that the Federal Reserve is about to lower the discount rate sent T-bond futures soaring, analysts said.

“The strength of Treasury bill futures is telegraphing (dealers’ belief) that there’s an imminent cut in the discount rate coming,” said Gary Dorsch, senior money-market analyst with G. H. Miller & Co., Chicago.

Treasury bill futures have been on a steady rise the last couple weeks, even though bond futures have suffered some sharp corrections to their recent highs.

“So there’s still a lot of optimism that interest rates are going lower,” Dorsch said, “and the main force will come from the Fed.”

Treasury bonds settled 2 points higher with the June contract at 101 31/32 points.

Energy prices took a nose dive on the New York Mercantile Exchange, ending a five-day rally that had lifted crude oil futures nearly $4 a barrel.