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Bonds Rise in Light Trading

July 20, 1999

NEW YORK (AP) _ Bond prices rose Tuesday as investors grew optimistic that Federal Reserve Chairman Alan Greenspan would deliver a favorable message on interest rates before Congress on Thursday.

The price of the benchmark 30-year Treasury bond rose 7/32 point, or $2.19 per $1,000 in face value. Its yield, which moves in the opposite direction, slipped to 5.88 percent from 5.89 percent on Monday.

In the broader market, prices of short-term Treasury securities rose between 3/32 point and 1/8 point, while intermediate maturities rose 5/32 to 7/32 point, reported Bridge Telerate.

Greenspan is scheduled to give Congress a semiannual talk on the nation’s economy on Thursday.

While the Fed recently pushed up interest rates to help check inflationary pressures, recent economic reports indicate that inflation was tame in June. That has made investors optimistic the Fed will hold the line on rates for the time being.

A steady course is favored by investors, since higher rates on new fixed-income securities could hurt the value of existing ones.

In other trading Monday, yields on three-month Treasury bills slipped to 4.60 percent while the discount fell 0.04 percentage point from Monday’s auction to 4.48. Six-month yields fell to 4.64 percent, while the discount fell 0.02 percentage point from the weekly auction to 4.47 percent. One-year yields held steady at 4.93 percent, while the discount was unchanged from late Monday at 4.69 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 4.88 percent from 4.94 percent.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds fell 1/32 to 119 17/32. The average yield to maturity finished at 5.49 percent, up from 5.48 percent.

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