CREDIT : Bonds Edge Lower; Analysts Cite Bearish Mood

Bond prices finished mostly lower in light trading Tuesday, although prices recovered from the day’s lows reached after a report of strong retail sales raised fears of accelerating inflation.

Analysts said a decline in crude and other commodities prices helped the market rebound.

The Treasury’s 30-year bond declined 3/32 point, or about 90 cents for every $1,000 in face amount, after falling 7/32 point early in the day.

Its yield, which moves in the opposite direction from its price, inched up to 9.01% from 9.00% late Monday.

Retail sales, bolstered by big gains at department stores and auto dealerships, jumped 0.9% in October, the biggest increase in seven months, the Commerce Department said Tuesday.

A second government report of a 0.4% increase in October in industrial production had a slightly less negative impact. Analysts said the report was within expectations.

In addition to the reports, bond traders said the market was still hurt by an overall bearish mood.

Traders said the bond market was not concerned by the dollar, which was relatively stable in the currency markets.

“The rebound seems to be in response to some downturn in some key commodities prices--copper, energy and grains,” said William Sullivan, senior vice president for Dean Witter Reynolds Inc.

Also, some short covering or buying before today’s merchandise trade deficit helped firm prices, Sullivan said. Some economists expect a decline in imports to narrow the September deficit to between $9.5 billion and $11 billion, compared to $12.2 billion in August, which would be good news for the bond market.

In the secondary market for Treasury bonds, prices of short-term governments lost 3/32 point, intermediate maturities were off between 1/16 point and 1/8 point and 20-year issues declined 3/32 point, according to Telerate Inc., a financial information service.

The Shearson Lehman daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, was down 1.29 to 1,142.15.

Yields on three-month Treasury bills rose to 8.21% as the discount rose 13 basis points to 7.94%. Yields on six-month bills rose to 8.38% as the discount advanced 8 basis points to 7.94%.

Yields on one-year bills rose to 8.52% as the discount gained 8 basis points to 7.93%.

A basis point is one-hundredth of a percentage point.

The federal funds rate, the interest on overnight loans between banks, was quoted at 8.675% late in the day, up from 8.375% late Monday.