CREDIT : Details of Auction Calm Traders; Bond Prices Rise

Bond prices edged higher Wednesday, helped by strength in the dollar and relief about the government’s announcement of its borrowing plans for early next month.

The Treasury’s benchmark 30-year bond rose 3/16 point, or about $2 per $1,000 in face amount. Its yield fell to 8.80% from 8.82%.

Traders said bond prices tended to follow the path of the dollar, falling early in the session as the dollar was weak but rebounding in the afternoon as the dollar suddenly moved higher.

The market was heartened by the details of the government’s announcement of plans to sell $28.75 billion in new securities next week, analysts said.

William V. Sullivan Jr., director of money market research for Dean Witter Reynolds, said there were worries that the Treasury planned to issue an abnormally large amount of longer-term issues in the February securities sale.

But the Treasury’s plans called for a fairly uniform division by maturity as it said it would sell $9.75 billion in three-year notes, $9.5 billion in 10-year notes and $9.5 billion in 30-year bonds.

“Bond prices came back after that because most people in the market realized that their fears about getting a lot of long-term debt were misplaced,” Sullivan said.

But he said trading was fairly light, as many traders stayed out of the market in anticipation of the January employment report to be released Friday.

In the secondary market for Treasury bonds, prices of short-term governments were up 1/32 point, intermediate maturities were up 1/16 point and long-term issues gained 3/32 point, the Telerate Inc. financial information service said.

The movement of a point is equivalent to a change of $10 in the price of a $1,000 bond.

The Shearson Lehman Hutton daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, rose 0.62 to 1,139.95.

In corporate trading, prices edged up. Moody’s investment grade corporate bond index was up 0.18 to 299.37.

In the tax-exempt market, prices were unchanged. The Bond Buyer index of 40 actively traded municipal bonds held at 92-11/32, the same as late Tuesday.

Yields on three-month Treasury bills were unchanged at 8.64% as the discount held at 8.35%. Yields on six-month bills fell to 8.86% as the discount fell 2 basis points to 8.38%. Yields on one-year bills fell to 8.98% as the discount fell 2 basis points to 8.32%.

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 at 8.938%, down from 9.125% late Tuesday.

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