CREDIT : Bond Prices Meander, End Day Mixed
Bond prices drifted in a narrow range and finished mixed Wednesday in quiet pre-holiday trading.
The Treasury’s bellwether 30-year issue edged up 1/16 point, or less than $1 for every $1,000 in face amount. Its yield slipped to 9.10% from 9.11% late Tuesday.
Analysts said bond prices weakened early in the day as oil prices advanced, suggesting that value-eroding inflation could accelerate.
But they said bonds recovered some lost ground later as oil prices fell off their highs amid indications that the Organization of Petroleum Exporting Countries may have a tough time coming to an agreement on production limits.
Elliott Platt, research director for Donaldson Lufkin & Jenrette Securities Corp., said the market appeared to shrug off the government’s report that durable goods orders rose 2.4% in October.
He said that even though the increase was bigger than expected, it reflected a sizable rise in defense orders, which many economists do not view as an indication of underlying economic strength.
Industrials Advance
Platt said the pace of trading trailed off sharply in the afternoon as many traders got a head start on the Thanksgiving holiday.
In the secondary market, prices of short-term government issues were unchanged, intermediate maturities fell 3/32 point and 20-year issues rose 1/8 point, according to Telerate Inc., a financial information service.
The movement of a point equals a change of $10 in a $1,000 bond.
The Shearson Lehman daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, fell 0.42 to 1,134.52.
In corporate trading, industrials gained ground. Moody’s investment grade corporate bond index, which measures price movements on 80 corporate bonds with maturities of five years or longer, rose 0.07 to 293.74.
In tax-exempt trading, prices declined 1/32 point, according to the Bond Buyers municipal bond index.
Yields on three-month Treasury bills fell to 8.25% with the discount down 3 basis points at 7.98%. The yield on six-month bills was unchanged at 8.52% as the discount held at 8.07%. Yields on one-year bills fell to 8.68% as the discount fell 1 basis point to 8.05%.
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 8.3125%, down from 8.375% late Tuesday.
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