CREDIT : Bond Prices Nudged Up by Dollar’s Gains

Bond prices edged higher in moderate trading Friday as investors reacted to a surge in the dollar after the government’s report that the U.S. trade deficit for May had not worsened considerably.

The Treasury’s bellwether 30-year bond rose about point, or about $2.50 for every $1,000 in face amount. Its yield slipped to 9.14% from 9.17% late Thursday.

Long bond prices made the biggest gains, but trading in those securities was light, said William Sullivan Jr., director of money market research for Dean Witter Reynolds Inc.

The bond market had been sluggish during the week in anticipation of three key economic reports--on the trade deficit, producer prices and industrial production, all released Friday.

But all of the reports were about as expected, and as a result had little effect on bond prices, analysts said. They said bond prices got a push, however, from the dollar’s rise in foreign exchange markets.

In the secondary market for Treasury bonds, prices of short-term government issues rose about 1/16 point, intermediate maturities rose between 1/8 point to 7/32 point and 20-year issues were up 5/32 point, according to the financial information service Telerate Inc.

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

The Shearson Lehman daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, was up 1.61 to 1,138.97.

Among tax-exempt municipal bonds, general obligations were unchanged while dollar bonds were up point. Trading was moderate.

Three-month Treasury bills were down 1 basis point to a discounted rate of 6.71%, for a yield of 6.91%. Six-month bills rose 4 basis points to a discounted rate of 7.05% to yield 7.40%, and one-year bills were unchanged at 7.26% to yield 7.77%.

The federal funds rate, the interest on overnight loans between banks, was quoted at 7.813%, up from 7.75% Thursday.

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