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Bond Prices Fall Sharply

March 27, 2001

NEW YORK (AP) _ Bond prices fell sharply Tuesday, sending their yields higher, as consumer confidence rose and stocks rebounded.

The price of the benchmark 10-year Treasury note fell 1/8 point, or $11.25 per $1,000 in face value. Its yield, which moves in the opposite direction, rose to 5.00 percent compared with 4.86 percent late Monday.

Treasury securities fell after a report was released showing a that consumer confidence rose in March for the first time in six months, a sign that the Federal Reserve may not need to cut interest rates as aggressively to lift the economy.

Also, a rebound on the stock market was luring investors back after a rough ride led many to park their money in super-safe Treasurys in the past few weeks. The Dow Jones industrial average rose 260.01 to 9,947.54, a 2.7 percent gain.

The 30-year Treasury bond fell 1 5/16 point to yield 5.46 percent, up from 5.37 percent a day earlier, according to Bridge Telerate news service.

In other trading, short-term Treasury securities fell between 1/4 point to 11/32 point, while intermediate maturities fell between 11/16 point and 27/32 point.

Yields on three-month Treasury bills were 4.32 percent as the discount rose 0.06 percentage point to 4.22 percent. Six-month yields were 4.26 percent, as the discount rose 0.02 percentage point to 4.12 percent. One-year yields were 4.29 percent as the discount rose by 0.13 percentage point to 4.12 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, was unchanged from late Monday at 5.06 percent.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds fell 17/32 to 104 9/16. The average yield to maturity rose to 5.30 percent from 5.27 percent.

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