CREDIT : Dollar, Commodities Help Bonds Chalk Up Big Gain

The bond market posted its biggest gain in nearly four weeks Monday, helped by a stronger dollar, lower commodity prices and speculation that the economy may be slowing.

But analysts said trading was very light and might not provide a good indication of underlying trends in prices and rates.

The Treasury’s 30-year bond climbed 15/16 point, or nearly $10 per $1,000 face amount. That was its biggest one-day gain since Aug. 2. Its yield fell to 9.33% from 9.43% late Friday.

Elliott Platt, director of fixed-income research for Donaldson, Lufkin & Jenrette Securities Corp., said a rise in the dollar in foreign exchange trading and a decline in commodity prices helped bonds score some gains.

The dollar rose, for example, to 134.54 Japanese yen in New York from 133.78 yen late Friday. A rising dollar lifts the yields available to foreign investors on their dollar-denominated holdings.

The Commodity Research Bureau index, often viewed as an indicator of general price trends, fell 1.86 to 244.74. Inflation erodes the value of bonds, and a slowdown in inflation is viewed positively in the bond market.

In economic news, the government reported Monday that sales of new homes fell 4.7% in July from the previous month.

New Reports Due

But Platt said the market expected a decline in the housing figure because of the recent run-up in interest rates.

He said the price gains may have reflected speculation that the government’s report on the leading economic indicators, scheduled for release today, will show a big decline for July and that the employment report, due for release Friday, will show smaller payroll growth in August.

Slower economic activity is generally viewed as a plus for bond prices because demand for credit often slows under such conditions and pressure on interest rates eases.

In the secondary market for Treasury bonds, prices of short-term governments rose 3/16 point, intermediate maturities climbed by between 11/32 point and 5/8 point and 20-year issues rose 29/32 point, according to Telerate Inc., a financial information service.

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

Indexes Advance

The Shearson Lehman daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, rose 4.53 to 1,128.06.

In corporate trading, industrials were up. Moody’s investment grade corporate bond index, which measures price movements on 80 corporate bonds with maturities of five years or longer, rose 1.30 to 282.95.

Yields on already outstanding three-month Treasury bills fell to 7.55%, as the discount slipped 2 basis points to 7.32%. Yields on six-month bills fell to 7.84%, as the discount fell 2 basis points to 7.46%. Yields on one-year bills fell to 8.28%, as the discount fell 2 basis points to 7.70%.

A basis point is one-hundredth of a percentage point. The yield is the annualized return on an investment in a Treasury bill. The discount is the percentage that bills are selling below the face value, which is paid at maturity.

The federal funds rate, the interest on overnight loans between banks, traded at 8.125%, unchanged from late Friday.

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