CREDIT : Bond Prices Edge Lower as Traders Await Jobless Data
Bond prices finished unchanged to slightly lower Tuesday, pressured somewhat by a weaker dollar.
The Treasury’s closely watched 30-year bond edged down 1/32 point, or about 30 cents 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 unchanged from late Monday at 8.95%.
Analysts said the dollar’s decline early in the day helped depress bond prices but that most traders were reluctant to make any major deals until the government’s unemployment report for September is released Friday. The U.S. currency finished mixed.
Possible Interpretation
“The events are Friday,” said Jay Goldinger, a principal of Capital Insight Inc., an investment firm in Beverly Hills. “Most of the players have taken to the sidelines.”
An improvement in the nation’s job picture could indicate continued strength in the economy, and, therefore, drive down the value of bonds. Most bondholders worry that economic growth could trigger higher inflation, which erodes the value of fixed-income securities.
The dollar finished at 133.30 Japanese yen in New York trading, down from 133.68 yen late Monday.
The Treasury announced its plans to raise about $775 million in new cash next Tuesday with the sale of about $14 billion in short-term bills.
Prices of existing short-term government issues in the secondary market were unchanged to 1/16 point lower, intermediate maturities declined 1/32 point to 1/8 point, and long-term issues slipped 1/32 point, according to figures provided by Telerate Inc., a financial information service.
The movement of a point equals a change of $10 in the price of a bond with a $1,000 face value.
Index Edges Up
The Shearson Lehman Hutton composite Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, was down 0.46 at 1,147.37.
In corporate trading, on the other hand, industrials and utilities rose. Moody’s investment grade corporate bond index, which measures price movements on 80 corporate bonds with maturities of five years or longer, edged up 0.43 to 292.62.
Yields on three-month Treasury bills, meanwhile, were unchanged at 7.45% and the discount was flat at 7.22%. Yields on six-month bills rose to 7.87% and the discount was up 3 basis points at 7.48%. Yields on one-year bills rose to 8.12% and the discount was up 1 basis point at 7.56%.
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, was quoted late in the day at 8.063%, down from 8.188% late Monday.
