CREDIT : Bond Prices Close Mixed in Light Trading

Bond prices finished narrowly mixed in light activity Wednesday as dealers took a break from the recent hectic pace of trading.

The Treasury’s bellwether 30-year bond fell 5/32 point, or about $1.50 for every $1,000 in face value. Its yield, which moves inversely to its price and is often an indicator of interest rate trends, was 9.41%, unchanged from late Tuesday.

Analysts said trading was slow in the aftermath of Tuesday’s government report that showed a higher-than-expected trade deficit of $12.5 billion for June.

“It was very quiet,” said Elizabeth G. Reiners, a vice president at Dean Witter Reynolds Inc. “The market took a rest.”

Reiners noted, however, that there were unconfirmed rumors of “big selling” of the government’s long bond, which worked to depress its price.

“If there actually was a seller, it would depress prices, and if people think someone is selling, then they’re not going to hold the market up and they want to sell too,” she said.

Higher Than Expected

Traders brushed off a fresh Commerce Department report that showed a 2.4% increase in housing construction last month. Analysts said a stronger dollar and the fact that building permits, an indicator of future building activity, were down neutralized the potentially negative effect of the report.

“(The) housing number was higher than expected, and one would have expected that would have caused further deterioration,” said Anthony Naylor, senior vice president of fixed-income securities at Rodman & Renshaw Inc.

“However, activity with the dollar overrode the effect of housing starts, along with the fact that housing permits . . . were down” 5.4% last month, he said.

Prices of short-term government issues were unchanged to 1/32 point higher; intermediate maturities were 1/32 point to 1/16 point higher, and 20-year issues were off 1/8 point, according to figures provided by Telerate Inc., a financial 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 Shearson Lehman daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, was up 0.15 at 1,124.40.

Funds Rate Dips

Corporate bonds moved slightly higher. Moody’s investment grade corporate bond index, which measures price movements on 80 corporate bonds with maturities of five years or longer, edged up 0.18 to 280.72.

Three-month Treasury bills fell 7 basis points to a discounted rate of 7% and a yield of 7.22%. Six-month bills fell 4 basis points to a discounted rate of 7.52% to yield 7.92%, while one-year bills slipped 2 basis points at 7.68% and a yield of 8.24%.

A basis point is one-hundredth of a percentage point. The yield is the annualized return on an investment in a Treasury bill. The discounted rate is the interest rate the market uses to price bills.

The federal funds rate, the interest on overnight loans between banks, was quoted at 8, down from 8.125 late Tuesday.

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