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Bonds Prices Follow Dollar Higher

January 6, 1999

NEW YORK (AP) _ Treasury bond prices rose Wednesday for the first time in four sessions as the dollar gained ground against the yen and euro.

The price of the benchmark 30-year Treasury bond rose 21/32 point, or $6.56 per $1,000 in face value. Its yield, which moves in the opposite direction, fell to 5.16 from 5.20 percent late Monday.

Bonds fell early in the session as U.S. stocks rose to record highs. A rising stock market competes with bonds for investors’ dollars.

But bond prices later moved up as the U.S. dollar gained against the yen and euro, boosting the the appeal of dollar-dominated investments for foreign investors.

In the broader market, prices of short-term Treasury securities were up between 3/32 and 1/8 point, and intermediate maturities were up 7/32 to 1/4 point, reported Bridge Telerate, a financial information service.

The Lehman Brothers Daily Treasury Bond Index, reflecting price movements on bonds with maturities of a year or longer, rose 2.87 points to 1,318.69.

Yields on three-month Treasury bills were 4.45 percent as the discount fell 0.02 point to 4.35 percent from late Tuesday. Six-month yields were 4.53 percent, as the discount fell 0.03 point from the auction to 4.38 percent. One-year yields were 4.51 percent as the discount fell 0.03 point from late Tuesday to 4.32 percent.

Yields are the interest bonds pay by maturity, while the discount is the interest at which they are sold.

The federal funds rate, the interest on overnight loans between banks, fell to 3.50 percent from 4.50 percent.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds rose to 124 19/32 from 124 7/16. The average yield to maturity fell to 5.18 percent Wednesday from 5.17 percent.

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