Bonds Mostly Up in Quiet Trading
NEW YORK (AP) _ Bonds were mostly higher Thursday as traders shifted their focus from the failed Soviet coup to the stumbling economic recovery.
The price of the Treasury’s bellwether 30-year bond was up 1/8 point, or $1.25 per $1,000 in face amount. Its yield, which falls when prices rise, slipped to 8.05 percent from late Wednesday’s 8.06 percent.
Short-term issues were mixed, as traders continued to unwind positions taken during Monday’s outset of the three-day coup, which drove investors to the ″safe haven″ of Treasuries.
Bonds seemed little moved by the release of jobless statistics that analysts saw as a sign of a sputtering recovery. The Labor Department reported a 22,000 increase in the number of Americans filing new claims for unemployment benefits in the first full week of August.
Many expect the release of August unemployment statistics Sept. 6 may prompt the Federal Reserve to ease interest rates. Lower interest rates, used by the central bank to boost economic growth, generally benefit bonds.
″There’s a general belief that the economy is weak and the Fed is in an accomodating mood,″ said John Slosberg, senior fixed-income analyst for Technical Data Global Markets Group in Boston.
At the Treasury’s auction of 52-week bills, rates fell to the lowest level in five years. The average discount rate was 5.36 percent, down from 5.88 percent at the last auction on July 25.
In the secondary market for Treasury bonds, short-term maturities were 1-32 point lower to 1-32 point higher, intermediate maturities were up 1-32 point to 1-16 point and long-term issues were up 1/8 point, the Telerate Inc. financial information service reported.
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 Lehman Brothers Daily Treasury Bond Index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, edged up 0.74 to 1,204.07.
Yields on three-month Treasury bills rose to 5.44 percent as the discount was up 1 basis point to 5.29 percent. Yields on six-month bills rose to 5.53 percent as the discount was up 3 basis points to 5.30 percent. Yields on one- year bills rose to 5.62 percent as the discount was up 4 basis points to 5.32 percent.
A basis point is one-hundredth of a percentage point. The yield is the annualized return on an investment in a Treasury bill. The discount is the percentage that bills are selling below the face value, which is paid at maturity.
The federal funds rate, the interest on overnight loans between banks, was quoted at 5 9.16 percent, down from late Wednesday’s 7 percent.
In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds closed at 93 29-32, up 1-32 point. The average yield to maturity was unchanged from late Wednesday’s 6.97 percent.