CREDIT : Falling Price of Oil Helps Push Bond Prices Lower

Bond prices edged higher Monday as oil prices slipped and traders looked ahead to the release of U.S. trade deficit figures for April.

The Treasury’s 30-year bond rose point, or $2.50 per $1,000 in face value, as its yield fell to 9.01% from 9.04% on Friday.

Market watchers said a fresh decline in oil prices helped alleviate some of the recent worries about inflation, which erodes bond values.

On the New York Mercantile Exchange, the July contract for the benchmark West Texas Intermediate crude oil fell 30 cents to close at $16.43 per 42-gallon barrel. The 13-nation Organization of Petroleum Exporting Countries failed to come up with a new pricing and production agreement during the weekend at its ministerial meeting in Vienna.

Analysts said bond trading was relatively quiet in advance of the trade figures scheduled to be released this morning.

“Everyone is waiting for the trade number,” said Sung Won Sohn, chief economist for Norwest Corp. in Minneapolis.

He said the consensus among economists is that the trade deficit widened in April slightly from a seasonally adjusted $11.95 billion in March. He expects a deficit of $12.5 billion.

The release of the trade figures has often caused a sharp reaction in the currency markets, and that has often had an effect on bond prices.

In the secondary market for Treasury bonds, prices of short-term government issues rose about 1/8 point, intermediate maturities rose about point and long-term issues were up nearly 1/2 point, the financial information service Telerate Inc. said.

The movement of a point equals 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 0.11 to 109.88. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, rose 1.51 to 1,150.21.

In the tax-exempt market, prices of municipal bonds rose 3/16 point, according to the bond buyer municipal bond index.

Yields on three-month Treasury bills fell 1 basis point to 6.44%, six-month bills rose 1 basis point to 6.66% and one-year bills were unchanged at 6.94%. 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 7.50%, up from Friday’s 7.313%.