CREDIT : Bond Prices Get Lift From Firmer Dollar

Bond prices turned upward Friday after a week of declines triggered by a falling dollar.

The Treasury’s 30-year bond rose 13/32 point, or about $4 for every $1,000 face amount. Its yield slipped to 9.14% from 9.17%.

Analysts said bond prices opened stronger than in the previous four days, buoyed by a rising dollar.

The market had sagged during the week as the dollar declined, discouraging foreign investment in the U.S. fixed-income market and stirring concerns that the Federal Reserve may encourage higher interest rates to defend the dollar.

But a round of concerted intervention by central banks helped break the dollar’s fall Thursday and another round of dollar buying was reported Friday.

“When the bond market saw the dollar firming it gave investors encouragement to do some buying,” said Marshall B. Front, an economist at the Chicago investment and mutual fund management firm Stein Roe & Farnham.

“The lower dollar raises the specter of foreigners being unwilling to provide the liquidity needed to finance the budget deficit,” Front said.

Secondary Market Up

Also weighing on the bond market have been concerns that the economy is growing at a pace that could stir inflation, which erodes the value of securities such as Treasury notes and bonds.

In the secondary market for Treasury bonds, prices of short-term governments rose 1/32 point, intermediate maturities were unchanged to 5/16 point higher and 20-year issues were up 13/32 point, according to 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 daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, rose 1.62 to 1,135.87.

In corporate trading, industrials rose. Moody’s investment grade corporate bond index, which measures price movements on 80 corporate bonds with maturities of five years or longer, rose 0.42 to 294.02.

In the municipal bond market, prices edged up by about 1/32 point, according to the Bond Buyers municipal bond index.

Yields on three-month Treasury bills rose to to 8.20% as the discount gained 2 basis points to 7.94%. The yield on six-month bills slipped to 8.39% as the discount lost 1 basis point to 7.95%. Yields on one-year bills fell to 8.55% as the discount lost 1 basis point to 7.94%.

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 8.25%, unchanged from late Thursday.

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