CREDIT : Bonds Rise on Signs of Slow Retail, Car Sales

Bond prices pushed ahead Thursday in subdued trading in advance of the unemployment report for October.

Analysts said a decline in precious metals prices, a sluggish October performance by the nation’s major retailers and late October auto sales figures that were perceived to be weak all contributed to the price rise.

The Treasury’s bellwether 30-year bond rose 1/2 point, or about $5 per $1,000 face amount, while its yield fell to 8.74% from 8.78% late Wednesday.

The pace of trading was restrained, however, as many investors stayed out of the market in advance of today’s scheduled government report on the nation’s employment situation in October.

But Elliott Platt, research director for the investment firm Donaldson, Lufkin, Jenrette Securities Inc., said assorted economic developments provided “quite an abundance of good numbers for one day.”

He said precious metals prices weakened as the day wore on, suggesting that the prospects are improving for continued moderate inflation.

Expects Steady Rate

He said that while the three largest U.S. auto makers reported late October sales gains compared to weak post-stock market crash results a year ago, the sales trend is still considered fairly sluggish overall.

In addition, he noted that the major retailers reported October sales that many analysts said continued recent sluggish trends.

The combination of declining precious metals prices and sluggish economic growth is considered positive for the bond market because it reduces chances that the Federal Reserve will find it necessary to push interest rates higher in a bid to restrain excessive growth.

Platt said he is looking for further confirmation of a moderate growth pace for the economy in the employment numbers for October.

He expects the unemployment rate to remain unchanged at 5.4%, while non-farm business payrolls may expand by 220,000 to 225,000.

“I’m expecting not much of a change from the more moderate growth we have seen in more recent months,” he said.

In the secondary market for Treasury bonds, prices of short-term government issues were up 3/32 point, intermediate maturities rose by between 1/8 point and 13/32 point and 20-year issues were up 5/16 point, according to figures provided by Telerate Inc., a financial information service.

Yields on three-month Treasury bills, meanwhile, fell to 7.59% as the discount fell 4 basis points to 7.36%. Yields on six-month bills fell to 7.85% as the discount fell 2 basis points to 7.46%. Yields on one-year bills fell to 8.01%, with the discount down 4 basis points to 7.47%.

The federal funds rate, the interest on overnight loans between banks, was 8.313%, down from 8.675% late Wednesday.