Bond prices inched higher in a narrow trading range Thursday as investors anxiously awaited the release of November trade deficit figures.
The Treasury's bellwether 30-year bond gained about 1/8 point, or $1.25 per $1,000 face amount. It yielded 9.02%, up slightly from 9.01% late Wednesday. Corporate bonds also rose a bit.
Analysts said trading was slow because of uncertainty about the trade deficit figures to be released today by the Commerce Department.
Estimates range from $14 billion to more than $18 billion. The October trade deficit of $17.6 billion, an all-time record, sent bond prices tumbling.
"If the trade numbers are pretty much in line with expectations, around $15 billion or so, it probably won't have much effect on the market," said Maria F. Ramirez, a managing director at Drexel Burnham Lambert Inc.
Should the trade gap rise much above general expectations, "those who are bearish will have more of an excuse to pare down their positions," she said.
The trade picture concerns the bond market because a widening shortfall would put pressure on the dollar. When the currency declines, it raises inflation prospects and discourages foreigners from buying U.S. securities, thereby depressing their worth.
Conversely, a narrowing trade deficit is likely to raise the dollar's value, lessen inflationary pressure, encourage foreign investment in the United States and boost the price of stocks and bonds.
In the secondary market for Treasury bonds, prices of short-term governments rose 1/32 point; intermediate maturities were 3/32 point to 5/32 point higher, and 20-year issues were off about 3/16 point, according to Telerate Inc.
The federal funds rate, the interest on overnight loans between banks, traded at 6.8125%, up from 6.5% late Wednesday.
Tables, Page 7