Commodities : Wednesday, Sept. 3, 1986 : Interest-Rate Futures Drop

Interest rate futures went into a steep dive Wednesday, responding to a government official saying the dollar could weaken further in relation to foreign currencies.

Treasury bond futures lost more than two points at the Chicago Board of Trade before recouping some of the loss. The September contract settled 110/32 points lower at 98 29/32 points.

In other markets, livestock and meats, platinum, and soybeans and wheat were all were higher.

U.S. Trade Representative Clayton Yeutter was quoted in a Washington interview as saying that he foresees further currency realignments with the dollar sinking lower in value.

“The market didn’t like that,” said Craig Sloan, an analyst in New York with Smith Barney, Harris Upham & Co. In part, Sloan said, some of the selling was for technical reasons, with the market running out of steam at the 102-point level.

“That attracted some new selling, with the thinking that maybe the market had topped out,” he said. But Yeutter’s remarks had a particularly negative cast when taken along with comments earlier in the week by Federal Reserve Chairman Paul Volcker, linking the lower dollar and inflation, Sloan said.