Bonds Mixed; Short-Term Notes Rise
NEW YORK (AP) _ Shorter-term government bond prices rose for the second straight session Friday as investors shifted money out of both stocks and long-term Treasurys.
The shift in strategy caused the benchmark long-term bond to slip for a second day in a row.
The price of the 30-year Treasury bond fell 1/32 point, or 31 cents per $1,000 in face value. The yield, which moves in the opposite direction of price, rose to 6.14 from 6.13 late Wednesday.
Investors often rotate money into government secured bonds when the stock markets falter. On Friday, the Dow Jones industrial average, home to many of the nation’s oldest publicly traded companies, lost 230.51 points to end at 9,862.12, the first time the blue-chip index has closed below 10,000 since April.
Technology stocks were also sold off Friday, adding additional allure to the bond markets.
Analysts said short-term bonds have become increasingly popular in the wake of the U.S. government’s announcement that it intends to reduce the amount of long-term bonds to help pay down the national debt.
The pay-down program means some government bonds could be phased out altogether.
Elsewhere in the bond market, prices of short-term Treasury securities rose 7/32 point to 9/32 point and intermediate maturities rose by 11/32 point to 3/16 point, according to Bridge Telerate.
Yields on three-month Treasury bills were 5.76 percent, with the discount down 0.03 percentage point to 5.60 percent from Thursday’s 5.63 percent. Six-month yields were 5.97 percent as the discount was down 0.03 percentage point to 5.71 percent. One-year yields were 6.14 percent, with the discount falling 0.03 percentage point from late Wednesday to 5.80 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 5.68 3/4 from 5.75 on Wednesday.
The Bond Buyer index of municipal bonds was unchanged at 92 11/16. The yield to maturity of the index was also unchanged from Thursday’s 6.17 percent.