CREDIT : Bond Prices Up on Hopes of Cool Economy

Bond prices rose Tuesday in quiet trading on speculation that the economy may be slowing.

The Treasury’s benchmark 30-year bond rose about 1/2 point, or $5 for every $1,000 in face value. Its yield, which moves in the opposite direction from its price, declined to 9.11% from 9.16% late Monday.

The Commerce Department reported that retail sales dropped 0.4% in February, the biggest decline in almost a year. Sales fell to a seasonally adjusted $138.2 billion last month after rising a strong 0.7% in January.

The drop-off was most apparent in sales of durable goods, normally the first to be affected by higher interest rates. Many banks raised the prime rate to 11.5% last month. The prime rate is a benchmark against which banks measure a variety of consumer and business loan charges.

“It leads to expectations the economy is slowing in response to higher interest rates,” said Steven A. Wood, an economist with BankAmerica Capital Markets Group in San Francisco.

The federal funds rate, the interest on overnight loans between banks, was quoted late in the day at 9.813%, up from 9.75% late Monday.