CREDIT : Bond Prices Rise as Dollar Climbs, Commodities Fall

Bond prices advanced broadly Tuesday as a surge in the dollar and a decline in commodity prices dampened inflation fears.

The Treasury’s bellwether 30-year bond rose by more than a full point, or $10 for every $1,000 in face value, as its yield fell to 8.85% from 8.96% late Monday. The closely watched bond fell more than $10 on Monday.

Analysts said the market appeared to be impressed that the dollar continued its rise despite concerted intervention by central banks.

The dollar’s appreciation has made dollar-denominated securities, such as U.S. Treasury bonds and notes, more attractive to foreign investors.

Bonds also benefited from a decline in the Commodity Research Bureau’s index, which fell 3.32 points after rising more than 5 on Monday.

Nonetheless, some analysts such as Harold Nathan of Wells Fargo & Co. in San Francisco remain skeptical that the rally will continue.

Nathan said he expects that the central banks in West Germany and Japan may boost their base lending rates in support of their currencies and that could depress foreign demand for U.S. bonds.

In the secondary market for Treasury bonds, prices of short-term government issues rose 5/32 point; intermediate maturities were up by between 5/16 point and 23/32 point, and 20-year issues rose a full point, according to Telerate Inc., a business-information service.

The movement of a point is equivalent to a change of $10 in the price of a $1,000 bond.

The Shearson Lehman Hutton daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, rose 4.59 to 1,152.02. The Merrill Lynch bond index, which makes a similar measurement, rose 0.48 to 110.09.

Corporate bonds also were slightly higher. Moody’s investment grade corporate bond index, which measures price movements on 80 corporate bonds with maturities of five years or longer, rose 0.88 to 284.38.

In the tax-exempt market, prices were steady, according to the Bond Buyer municipal index.

Yields on three-month Treasury bills rose 2 basis points to 6.59%. Six-month bills fell 1 basis point to 6.73%, and one-year bills fell 3 basis points to 7.01%. 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 7.625%, up from 7.5625% Monday.

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