CREDIT : Traders Bullish; Bonds Surge

Interest rates fell sharply Friday as the credit markets staged an impressive comeback after losing some ground in the previous session.

The Treasury’s bellwether 30-year bond, which on Thursday fell about 1/8 point, or $1.25 per $1,000 in face amount, closed up $22.25.

Its yield slipped below 9% for the first time since November, to 8.92% from 9.15% late Thursday.

“People are getting a little more bullish” about bonds, said Jay Goldinger, an investment banker with Cantor, Fitzgerald & Co.

“It was one of those days where you didn’t know exactly why you should buy but you bought anyway,” he said.

Maria F. Ramirez, a managing director at Drexel Burnham Lambert Inc., said investors bought heavily because of a perceived lack of supply of bonds.

In the secondary market for Treasury bonds, prices of short-term governments rose between 3/32 point and 5/16 point; intermediate maturities were 3/8 point to more than a point higher, and 20-year issues were up more than two points.

In corporate trading, industrials and utilities were up about 1 3/4 point in moderate trading.

Yields on three-month Treasury bills were down 4 basis points to 5.86%. Six-month bills declined 2 basis points at 6.37%, and one-year bills fell 7 basis points at 6.67%.

The federal funds rate traded at 6-13/16%, up from 6-11/16%.