CREDIT : Bonds Lower as Stock Market Extends Gains

Most bond prices finished slightly lower in moderate trading Friday as the stock market extended its broad advance.

The Treasury’s closely watched 30-year bond fell point, or $2.50 for every $1,000 in face value. Its yield, which moves inversely to its price, was little changed from Thursday at 9.03%.

While the long-bond finished near the highs of the week, traders said that it zigzagged its way upward throughout the day. “There was a lot of backing and filling,” said Anthony Naylor, senior vice president of fixed-income securities at Rodman & Renshaw Inc.

“We think that there is a good deal of cash that had accumulated that has gone back into the stock market,” he said. “There’s a sort of general feeling that things may not be as bad as they were perceived to be.”

The Dow Jones average of 30 industrials soared 55.20 on Friday to 1,993.53, a 2.8% increase in value.

Still Buying

Naylor disputed assertions that investors pulled money out of the credit markets in order to buy equities, arguing that higher prices on some issues indicated that buyers are still at hand.

“We know there’s a lot of cash still idle as people wait for the lows to be tested,” he said.

In the secondary market for Treasury bonds, prices of short-term government issues declined 3/16 point to 3/8 point, intermediate maturities fell to 7/16 point, but 20-year issues edged up 19/32 point, according to figures provided by Telerate Inc., a financial information service.

The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

The Merrill Lynch Treasury bond index, which reflects price movements on outstanding Treasury bonds, rose 0.06 to 110.24. The Shearson Lehman Treasury bond index, which makes a similar measurement, was down 1.64 at 1,152.41.

Yields on three-month Treasury bills, meanwhile, soared 26 basis points to 5.26% while six-month bills climbed 10 basis points to 5.90% and one-year bills rose 12 basis points to 6.30%. A basis point is a hundredth of a percentage point.

Yields on corporate and municipal issues, normally provided by Salomon Bros. Inc., were not available.

The federal funds rate, the interest banks charge each other on overnight loans, was quoted at 6.87%, up from 6.75% late Thursday.

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