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CREDIT : Bond Prices Fall as Market Looks for Signals

From Associated Press

Bond prices fell slightly Tuesday in quiet trading as traders waited for Friday’s release of February unemployment figures.

The bellwether 30-year Treasury bond declined 1/8 point, or $1.25 for every $1,000 in face amount, after a rise Monday of $5. Its yield rose to 9.09% from 9.07% late Monday.

“There’s really very little focus to the market right now,” said Steven A. Wood, an economist with BankAmerica Capital Markets Group. “Everyone’s really sitting on their hands waiting for the next round of information to give us near-term direction.”

Analysts said the market was awaiting the government’s release of February U.S. employment figures due Friday. They said the dollar gave little direction to the bond market and there were no economic developments offering guidance.

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In the secondary market for Treasury bonds, prices of short-term governments slid about 3/32 point, intermediate maturities fell from 1/32 point to 1/8 point and long-term issues were down about 1/16 point, the Telerate Inc. financial information service said.

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 Hutton daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, was down 0.93 at 1,123.69.

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, increased 0.26 to 298.22.

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In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds rose 3/32 point. The average yield to maturity dropped to 7.71% from 7.72% late Monday.

Yields on the three-month Treasury bills sold in the regular weekly auction traded at 8.92%, and the discount was down 2 basis points at 8.62%. Yields on six-month bills sold Monday traded at 9.17% as the discount edged up 1 basis point from the auction level to 8.67%. Yields on one-year bills rose to 9.31% as the discount went up 3 basis points to 8.62%.

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 8.75%, down from 9.625% late Monday. Analysts attributed the drop to short-term factors such as snowy weather in New York and the Eastern Airlines strike, which affected the flow of funds in the banking system.


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