Credit : Bond Prices Close Lower in Erratic Trading

The U.S. Treasury bond market ended lower in brisk, choppy trading Tuesday as investors moved in step with an unsteady stock market.

Market analysts said bonds relinquished earlier gains as prices of stocks started to improve.

“Those that had bought are now giving up the hope that the stock market will continue to tumble and that the flight to quality into bonds will continue,” said Jay Goldinger, a principal at Capital Insight Inc., a Beverly Hills investment firm.

The closely watched Dow Jones industrial index closed down 18.65 points at 2,638.73 Tuesday, after losing as much as 63 points in late-morning trading. Analysts said the credit markets generally shrugged off a government report that the merchandise trade deficit rose in August to $10.77 billion.

In the secondary market for Treasury bonds, the bellwether 30-year issue, fell about 5/8 point, or $6.25 per $1,000 face amount, after rising around $6.25 by midday. Its yield, which moves inversely from its price, jumped to 8.03% from 7.97%.

In corporate bond trading, highly rated issues were unchanged to slightly higher. Moody’s investment grade corporate bond index, which measures total return on a portfolio of 80 corporate bonds with maturities of five years or longer, rose 0.02 to 336.02.