Bond prices finished unchanged to slightly higher Wednesday, getting an initial boost from sharply lower oil prices but failing to sustain the advance.
The Treasury’s closely watched 30-year bond rose 1/8 point, or $1.25 for every $1,000 in face value. Its yield, which moves inversely to its price and is an indicator of interest rate trends, slipped to 8.94% from 8.95% late Tuesday.
Oil prices tumbled in worldwide trading, piercing the psychologically important $13-a-barrel level on the New York Mercantile Exchange. The November contract for West Texas Intermediate, the benchmark U.S. crude oil, dropped 47 cents to close at $12.60 a barrel in heavy, hectic trading.
“Oil was the big story,” said Mitchell Held, chief financial economist for Smith Barney, Harris Upham & Co.
Traders often interpret lower energy prices as a signal that inflation is not likely to flare up in the near term.
Prices of existing short-term government issues in the secondary market were unchanged to 1/32 point lower, intermediate maturities were flat and long-term issues edged up 1/16 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.
The Shearson Lehman Hutton composite Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, edged up 0.07 to 1,147.44.
Federal Funds Ease
In corporate trading, 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, was up 0.27 at 292.89.
The federal funds rate, the interest on overnight loans between banks, was quoted late in the day at 7.875%, down from 8.63% on Tuesday.