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Bond Prices Edge Upward

May 21, 2001

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NEW YORK (AP) _ Bond prices edged upward Monday, with demand strongest for longer-dated Treasurys.

The price of the benchmark 10-year Treasury note rose 1/8 point, or $1.25 cents per $1,000 in face value. Its yield, which moves in the opposite direction, fell to 5.38 percent compared with 5.40 late Friday.

The 30-year Treasury bond rose 9/32 to yield 5.75 percent, down from 5.77 percent Friday, according to Bridge Telerate news service.

Bond traders had little new information to act on Monday. Investors continue to wonder about the direction of the economy, and that uncertainty has been evident in the lack of any strong momentum in bonds.

But investors are favoring longer-dated Treasurys on the belief that the economy is headed for recovery, while avoiding shorter-term notes on concerns that the Federal Reserve may be close to concluding its interest rate cuts.

Despite the absence of new information, Wall Street went on a technology buying spree Monday. The Nasdaq rose 106.68 to 2,305.56, according to preliminary calculations, the first time since August 2000 that the tech-dominated index has risen five straight sessions. The Dow Jones industrial average closed up 36.18 at 11,337.92, its highest close in 16 months.

In other bond trading, short-term Treasury securities rose 1/32 point. Intermediate maturities rose 1/16 point or were constant.

Yields on three-month Treasury bills were 3.61 percent as the discount was unchanged at 3.54 percent. Six-month yields were 3.74 percent, as the discount rose 0.02 percentage point to 3.63 percent. One-year yields were 3.74 percent as the discount gained 0.02 percentage point from late Friday to 3.62 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, rose to 4 percent from 3.94 percent.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds fell to 101 31/32 from 102 Friday. The average yield to maturity was at 5.46, unchanged from Friday.

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