CREDIT : Rising Interest Rates Give Bonds Nudge Downward

Bond prices slipped and interest rates edged up Monday in light trading that analysts said reflected continued uncertainty about the outlook for inflation and the economy.

The Treasury’s closely watched 30-year bond fell point, or about $2.50 for every $1,000 in face value, as its yield rose to 8.70% from 8.67% late Friday.

Bond prices fell to their lows of the day as oil and gold prices moved higher at the outset of trading, but bonds later recovered some ground as both energy and precious metals prices reversed course.

Elliott Platt, research director for the investment firm Donaldson, Lufkin & Jenrette Securities, said the bond market’s recent slump reflected growing speculation that the economy may be stronger than had been expected.

The Federal Reserve, meanwhile, said the average yield for one-year Treasury bills, the most popular index for making changes in adjustable-rate mortgages, dropped to 6.63% last week from 6.72% the previous week.

In the secondary market for Treasury bonds, prices of short-term government issues fell 3/32 point; intermediate maturities fell by 5/32 point, and 20-year issues were off 10/32 point, according to Telerate Inc., a financial information service.

In corporate trading, industrials and utilities fell 3/8 point in light trading, according to the investment firm of Salomon Bros.

Yields on three-month Treasury bills rose 4 basis points to 5.73%. Six-month bills rose 5 basis points to 5.89%, and one-year bills rose 5 basis points to 6.31%. A basis point is one-hundredth of a percentage point.

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