FINANCIAL MARKETS : Credit : Dealing Sluggish, Bonds Little Changed

Government and corporate bond prices finished little changed to slightly lower in sluggish dealings Wednesday as traders awaited the scheduled release later this week of more economic data.

The Treasury’s bellwether 30-year issue slipped 1/16 point, or 63 cents for every $1,000 in face amount. Its yield, which moves inversely to its price, rose to 9.10% from 9.09% late Tuesday.

Municipal prices edged up, however.

Analysts said government bond traders appeared to be holding back in anticipation of the slew of upcoming economic data, with the release of March retail sales figures due today followed a day later by new statistics on the U.S. trade deficit, producer prices and industrial production.

“It has been unusually quiet for the course of this entire week,” said Steven A. Wood, economist for BankAmerica Capital Markets Group in San Francisco. “Everybody is looking for this data to give some kind of confirmation about the state of the economy.”

He said the most significant number may be the producer price index, which is viewed as a gauge of inflationary pressures. After back-to-back rises of 1% in January and February, Wood is looking for a 0.6% increase for March.

A higher figure, he said, could prompt the Federal Reserve to boost interest rates in a bid to choke off inflation. Both rising interest rates and inflation lower the value of bonds.

Meanwhile, the Treasury sold $7 billion in seven-year notes at the highest level at that type of auction in 3 1/2 years.

The average yield was 9.39%, up from 9.30% at the last auction Jan. 11 and the highest since seven-year notes averaged 9.75% on Oct. 30, 1985.

In the secondary market for Treasury bonds, prices of short-term notes were unchanged, intermediate notes were down 1/16 point and long-term issues fell as much as 3/32 point, according to Telerate Inc., a financial reporting service.

The movement of a point equals a $10 change 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, fell 0.44 to 1,121.39.

In corporate trading, prices were steady. Moody’s investment grade corporate bond index, which measures price movements on 80 corporate bonds with maturities of five years or longer, held firm at 299.59.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds rose 1/32 point to 90 23/32. The average yield to maturity slipped to 7.73% from 7.74% late Tuesday.

Yields on three-month Treasury bills rose to 8.99%, while the discount rose 3 basis points to 8.68%. Yields on six-month bills rose to 9.29% as the discount rose 1 basis point to 8.77%. Yields on one-year bills held steady at 9.48% as the discount remained at 8.74%.

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, paid at maturity.

The federal funds rate, the interest on overnight loans between banks, was trading at 9 13/16%, up from 9.75% late Tuesday.

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