CREDIT : Bond Prices Gain Ground in Busy Trading

Bond prices advanced Thursday in active trading, lifted by a report on the nation’s trade deficit for January that was better than expected.

The Treasury’s closely watched 30-year bond rose about 3/4 point, or $7.50 for every $1,000 in face amount. Its yield, which moves inversely to its price, dropped to 8.53% from 8.60% late Wednesday.

In a long awaited report, the Commerce Department said the merchandise trade deficit widened slightly in January to $12.4 billion after two months of sharp improvements. The news cheered the credit markets despite the wider deficit, since most analysts had expected a trade shortfall of about $13 billion.

“The numbers were pretty juicy,” said Maria Ramirez, a managing director of Drexel Burnham Lambert Inc.

Unaffected by Factory Report

Bond prices have been pushed and pulled in recent months by data on the nation’s trade performance, mimicking the effect of the figures on the value of the dollar. A positive trade showing tends to bolster the U.S. currency and increase the value of dollar-denominated investments such as bonds.

Analysts said the market was unaffected by another government report Thursday that U.S. factories, mines and utilities operated at 82.4% of capacity in February, the third consecutive month the operating rate has been at that level.

In the secondary market for Treasury bonds, prices of short-term government issues rose 5/32 point to point; intermediate maturities advanced 7/16 point to 17/32 point, and 20-year issues gained 11/16 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 daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, rose 0.38 to 112.93. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, jumped 5.20 to 1,182.20.

Indexes Up

Moody’s investment grade corporate bond index, which measures price movements on 80 corporate bonds with maturities of five years or longer, edged up 0.76 to 284.27.

In the municipal bond market, the bond buyer index of 40 actively traded general obligation and revenue bonds rose 5/32 point to 88 27/32. The average yield declined to 8.07% from 8.09% late Wednesday.

Yields on three-month Treasury bills, meanwhile, declined 4 basis points to 5.56%. A basis point is one-hundredth of a percentage point. Six-month bills fell 7 basis points to 5.72%, and one-year bills dropped 8 basis points to 6.18%.

The federal funds rate, the interest on overnight loans between banks, was quoted late in the day at 6.437%, up from 6.375% late Wednesday.

Tables, Page 13