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Bonds Fall Again As Investors Fret

October 3, 2002

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NEW YORK (AP) _ Bond prices slipped again Thursday as investors, unnerved by mixed reports about the economy’s prospects for recovery, were reluctant to do much buying.

The price of the benchmark 10-year Treasury note was down 1/8 point, or $1.25 per $1,000 in face value. Its yield, which moves in the opposite direction, rose to 3.69 percent from 3.67 percent Wednesday.

The 30-year Treasury bond slipped 5/16 point to yield 4.74 percent, down from 4.72 percent a day earlier, according to Moneyline Telerate.

The Dow Jones industrials closed down 38 at 7,717, while the Nasdaq composite index fell nearly 22 points to 1,165. It was the tech-dominated index’s lowest close since Sept. 12, 1996, when it hit 1,165.81. The Standard & Poor’s 500 index dropped nearly 9 to just under 819. Analysts said investors played it safe following some mixed economic news. Wall Street was also waiting to see government employment statistics, due out Friday morning, before doing much more buying.

In other trading Thursday, the benchmark 2-year note fell 1/32 point to yield 1.74 percent, down from Wednesday’s 1.72 percent. Intermediate maturities dropped between 1/16 point and 3/32 point.

Yields on one-month Treasury bills were 1.58 percent as the discount fell 0.02 percentage points to 1.56 percent. Yields on three-month Treasury bills were 1.56 percent and the discount remained steady 1.53 percent. Six-month yields were 1.51 percent, as the discount slipped 0.01 percentage point to 1.48 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, remained at 1.75 percent.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds remained at 111 5/16. The average yield to maturity remained at 4.86 percent.

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