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Bond Prices Unchanged To Lower

November 25, 1987

NEW YORK (AP) _ Bond prices were unchanged to lower in quiet pre-holiday trading today.

″There’s not a whole lot going on,″ said John V. Sebastian, chief economist at the Clayton Brown & Associates securities firm in Chicago. ″It’s pre-holiday trading, with no major economic news, nor financial news, nor any startling developments with the dollar.″

As a result, he continued, the market was showing some minor weakness, ″as often tends to happen.″

At midday, the Treasury’s closely watched 30-year bond was down 5-16 point, or $3.13 for every $1,000 in face value, to yield 9.03 percent, according to Telerate, a financial information service. On Tuesday, the bond closed about $10 lower. Its yield, which moves inversely to its price, stood at 8.99 percent.

At Sanwa Bank in New York, bond analyst Toshiaki Hata said trading was very quiet, with negative undertones.

″There’s a little fear about inflation again, because after Black Monday, the Fed poured a lot of money into the market,″ he said.

He also said bond prices continued to reflect market disappointment with Washington’s budget-deficit-paring agreement of last week.

Both analysts also agreed that the market remained unmoved by the latest figures on the economy’s performance in October, because they were largely based on the period before the epic stock market crash of Oct. 19.

In Washington today, the Commerce Department said ″big-ticket″ durable goods orders by factories rose by 0.3 percent; sales of existing homes jumped ahead by 3.2 percent; and Americans’ personal incomes shot up 1.7 percent.

In the secondary market for Treasury bonds, prices of short-term governments fell 1-32 point, intermediate maturities fell 5-32 point and long- term issues were down 5/8 point, according to Telerate.

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

The Merrill Lynch Daily Treasury Index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, fell 0.24 to 109.98. The Shearson Lehman Daily Treasury Bond Index, which makes a similar measurement, fell 2.54 to 1,150.18.

In corporate trading, industrials were off 1/4 point and utilities fell 1/8 in very thin trading.

Moody’s Investment Grade Corporate Bond Index, which measures price movements on 80 corporate bonds with maturities of five years or longer, fell 0.72 to 264.10.

Yields on three-month Treasury bills were down 8 basis points to 5.70 percent. A basis point is one-hundredth of a percentage point. Six-month bills rose 10 basis points to 6.17 percent and one-year bills were off 2 basis points at 6.53 percent.

The federal funds rate, the interest on overnight loans between banks, traded at 6 11-16 percent, down from 6 3/4 percent late Tuesday.

-11-25-87 1235EST