CREDIT : Further Decline of Dollar, Lack of Economic News Drag Bonds Down

Government bond prices fell in light trading Monday in the absence of significant news on the direction of the economy.

The Treasury’s closely watched 30-year issue fell 17/32 point, or $5.31 for every $1,000 in face value. Its yield, which moves in the opposite direction of its price, rose to 9.05% from 9.00% late Friday.

The market’s decline came even though gold prices slumped and oil prices were lower most of the day. Lower commodities prices usually boost the value of bonds.

A continued decline in the dollar may have helped drag bonds down, said F. Ward McCarthy, chief financial economist at Merrill Lynch Capital Markets.

Elliott Platt, research director at Donaldson, Lufkin & Jenrette Securities Corp., said traders appeared to be lightening their positions in advance of economic reports to be released in October.

Statistics scheduled for release this week include another revision in the second-quarter estimate of growth in the gross national product and figures on consumer prices, personal income and consumption and durable goods orders for August.

In the secondary market for Treasury bonds, prices of short-term government issues were off 1/16 to 3/32 point, intermediate maturities fell 1/8 point to point and 20-year issues lost 7/16 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.

Interest rates on short-term Treasury securities fell in Monday’s auction. The Treasury Department sold $7 billion in three-month bills at an average discount rate of 7.17%, down from 7.21% last week. Another $7 billion was sold in six-month bills at an average discount rate of 7.34%, down from 7.41% last week.

The rates were the lowest since three-month bills sold for 7.05% on Aug. 15 and six-month bills averaged 7.26 on Aug. 8.

The new discount rates understate the actual return to investors--7.40% for three-month bills, with a $10,000 bill selling for $9,818.80 and 7.73% for six-month bills selling for $9,628.90.

The Shearson Lehman daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, fell 2.18 to 1,142.31.

In corporate trading, industrials fell slightly. Moody’s investment grade corporate bond index, which measures price movements on 80 corporate bonds with maturities of five years or longer, fell 0.46 to 289.92.

In municipal bond trading, prices fell slightly. The bond buyers municipal bond index of 40 long-term, investment-grade municipal bonds fell to 90.3125 from 90.5 Friday.

Yields on three-month Treasury bills rose to 7.37% from 7.36% as the discount rose to 7.15% from 7.14%. Yields on six-month bills rose to 7.77% as the discount rose to 7.39% from 7.36%. Yields on one-year bills edged up to 8.02% from 7.99% as the discount rose 4 basis point to 7.49%.

The federal funds rate, the interest on overnight loans between banks, was quoted at 8%, up from 7.875% late Friday.