CREDIT : Bond Prices Dip Slightly in Quiet, Apathetic Trading
Bond prices slipped fractionally Monday as the market remained apathetic in slow trading.
In late trading, the Treasury’s bellwether 30-year issue was down 1/32 point, or about 31 cents per $1,000 in face value. Its yield, which moves inversely to its price, rose to 9.05% from 9.04% on Friday, when the 30-year bond rose about a point.
After four days of heavy advances last week, the market was ready for some sort of corrective adjustment Monday, analysts said.
Like last week’s action, Monday’s performance was mainly based on technical market factors, said Toshiaki Hata of Sanwa Bank.
In a market still heavy with bearish undertones, he said, “today and last week were not real. They were only corrections.”
Hata said signs of potentially escalating inflation and higher interest rates continue to suggest that bond prices will decline in the months to come.
As for Monday, “there was not much happening,” said Robert J. Genetski, chief economist at Harris Trust & Savings Bank in Chicago.
“What can you say when nothing happens? Some of the numbers come out high. Some come out low. It’s tough to make something out of nothing,” he said.
In the secondary market for Treasury bonds, prices of short-term government issues fell 1/32 point, intermediate maturities fell 3/32 point and long-term issues were down 3/32 point, according to the Telerate business 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, fell 0.03 to 109.65. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, fell 0.40 to 1,147.54.
In corporate trading, industrials and utilities were unchanged in light trading.
Among tax-exempt municipal bonds, general obligations were unchanged and revenue bonds were up 1/8 point. Trading was quiet.
In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds was up 1/16 point at 88 1/16 as of 3 p.m. EDT. The average yield declined to 8.12% from 8.13% on Friday.
Yields on three-month Treasury bills were unchanged at 6.46%. Six-month bills fell 1 basis point to 6.73% and one-year bills were up 3 basis points at 7.03%. 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 7.375% up from 7.25% on Friday.
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