CREDIT : Bonds Rally on Optimism Over T-Bill Auction

Positive sentiments about a coming Treasury auction and President Reagan’s State of the Union address spurred a rally on bond markets Monday.

The Treasury’s bellwether 30-year bond rose 5/16 point, or $3.125 per $1,000 face amount. Its yield, which moves inversely to its price, slipped to 8.62% from 8.64% late Friday.

Analysts attributed the rally in part to optimism over foreign participation in next month’s Treasury refunding auction.

In the secondary market for Treasury bonds, prices of short-term governments were unchanged; intermediate maturities were up 3/32 point, and 20-year issues gained 11/32 point, according to figures provided by Telerate Inc.

Yields on three-month Treasury bills were up 3 basis points to 5.83%. Six-month bills rose 1 basis point to 6.19%, and one-year bills were unchanged at 6.37%. A basis point is one-hundredth of a percentage point.

The federal funds rate, the interest on overnight loans between banks, traded at 6.9375%, up from 6.50% late Friday.