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Bond Prices Are Lower

September 17, 2001

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NEW YORK (AP) _ Bond prices slipped back Monday after two days of solid gains as the U.S. stock markets finally reopened.

The price of the Treasury’s 10-year note was off 9/16 point, or $5.63 per $1,000 in face value, at 2 p.m. Monday, while its yield rose to 4.62 percent, from 4.55 percent at 2 p.m. Friday. Prices and yields move in opposite directions.

The price of the 30-year bond fell $10.63 per $1,000 to yield 5.43 percent, above the 5.36 percent from Friday.

Trading in U.S. treasuries occurred in the third straight shortened session after a two-day hiatus last week stemming from the attacks on New York and Washington that destroyed the World Trade Center and damaged the Pentagon.

U.S. stock markets opened for the first time since the attack and fell sharply. The Dow Jones industrial average fell 684.81 points, or 7.1 percent, to 8,920.70, while the Nasdaq composite index was off 1115.83 points, or 6.8 percent, to 1,579.55.

Yields on one-month Treasury bills were 2.50 percent as the discount was 2.47 percent. Friday’s results were not available.

Yields on three-month Treasury bills dipped to 2.63 percent, down from 2.72 percent on Friday as the discount fell .11 percentage point to 2.59. Six-month yields fell to 2.65 percent, down from 2.66 percent Thursday, as the discount fell 0.06 percentage point to 2.59.

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

Elsewhere, the benchmark 2-year note fell 1/8 point to yield 2.93 percent, up from 2.86 percent Friday.

The federal funds rate, the interest on overnight loans between banks, fell to 3.0 percent Monday, from 3.5 percent Friday, following the announcement by the Federal Reserve that it was cutting interest rates by 0.5 percentage point, the eighth interest rate cut this year.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds rose to 107 15/32, while the average yield to maturity was 5.15 percent. Index figures weren’t available from Friday.

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