CREDIT : 30-Year Issue Leads the Retreat in Bond Prices

Bond prices fell in fairly quiet trading Monday, extending Friday’s losses and pushing interest rates on long-term issues back over the 9% threshold.

The Treasury’s bellwether 30-year bond sustained the biggest loss. It dropped about 1 point, or $10 for every $1,000 in face value. Its yield jumped to 9.01% from 8.92% late Friday.

Analysts said bondholders were concerned about slightly higher oil prices, which raise the possibility of higher inflation, and the prospects for passage of the budget under Congressional negotiation.

Mitchell Held, an analyst for Smith Barney, Harris Upham & Co., noted that oil prices have replaced the dollar in the past week or so as the major concern driving the bond market.

Elizabeth G. Reiners, a vice president and fixed-income analyst at Dean Witter Reynolds Inc., also attributed Monday’s slump to speculation that Congress may grant the Treasury authority to auction the 30-year bond after all.

During most of last week, bond prices rallied sharply in anticipation of a lack of supply since the longest-maturing bond was not included in Congress’ revenue package.

In the secondary market for Treasury bonds, prices of short-term government issues fell 1/8 point to 7/32 point; intermediate maturities lost 7/32 point to 5/16 point, and 20-year issues tumbled 27/32 point, according to Telerate Inc., a financial data service.

The Shearson Lehman Daily Treasury Bond Index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, fell 3.71 to 1,152.34.

In corporate trading, industrials declined 3/4 point, and utilities were down 1/2 point in light trading, according to Salomon Bros. Inc.

However, Moody’s Investment Grade Corporate Bond Index, which measures price movements on 100 corporate bonds with maturities of five years or longer, edged up 0.05 to 266.22.

Yields on three-month Treasury bills, meanwhile, were unchanged at 5.85%. Six-month bills rose 9 basis points to 6.45%, and one-year bills gained 4 basis points at 6.69%.

The federal funds rate, the interest on overnight loans between banks, was quoted late in the day at 6 7/8%, up from 6-13/16% late Friday.

Tables, Page 15