CREDIT : Bond Prices Hold Steady in Cautious Trading
Government bond prices finished little changed Thursday in light dealings as most traders stayed out of the market in advance of the government’s September unemployment report.
The Treasury’s 30-year bond finished unchanged after trading slightly lower earlier in the day. Its yield held at 8.94%, the same as late Wednesday.
Bond traders have been looking toward today’s release of the September unemployment figures, which will be the government’s first official report on what the economy was doing as summer drew to a close.
As a result, trading was very light and bond prices stayed in a narrow range.
“Everybody’s of the opinion that it is not worth taking the risk one way or the other today on what the figures will show,” said Elliott Platt, research director at Donaldson Lufkin & Jenrette Securities Corp.
He said most economists expect a slight decline in the unemployment rate from the 5.6% level reported for August and a rise in non-farm payrolls of about 300,000, compared to the 219,000 gain in August.
The figures will also be examined for evidence of any upward pressures on wages. Some traders fear that those figures will indicate an acceleration in inflation, which would erode the value of bonds and could prompt the Federal Reserve to push interest rates higher.
In the secondary market, prices of short-term Treasury issues were unchanged, intermediate maturities edged up 1/32 point and 20-year issues rose 3/32 point, according to figures from 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 0.17 to 1,147.61.
In corporate trading, prices edged up. Moody’s investment grade corporate bond index, which measures price movements on 80 corporate bonds with maturities of five years or longer, rose 0.37 to 293.26.
Yields on three-month Treasury bills, meanwhile, rose to 7.54% and the discount advanced 10 basis points to 7.31%. Yields on six-month bills rose to 7.92% and the discount rose 3 basis points to 7.52%. Yields on one-year bills rose to 8.14% and the discount was up 2 basis points to 7.58%.
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 8.313%, up from 7.875% late Wednesday.