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Bond Prices Fall

June 5, 2003

NEW YORK (AP) _ Bond prices fell Thursday as the stock market sustained a rally despite disappointing economic reports.

The price of the benchmark 10-year Treasury note fell 5/16 point, or $3.13 per $1,000 in face value. Its yield, which moves in the opposite direction, rose to 3.34 percent from 3.30 percent Wednesday. The 30-year Treasury bond fell 9/16 of a point and its yield rose to 4.40 percent, up from 4.37, according to Moneyline Telerate.

The Dow Jones industrial average closed up 2 points, essentially unchanged, at 9,041. The broader market also finished higher. The Nasdaq composite, trading at levels not seen since May 2002, gained 11 points, closing at 1,646. The Standard & Poor’s 500 index, trading at levels not seen since last July, rose 4 points to close at 990.

In other bond trading, the price of the benchmark 2-year note fell 1/16, yielding 1.24 percent, up from 1.21 percent Wednesday. Intermediate maturities were down between 3/32 point and 11/32 point.

Yields on one-month Treasury bills were unchanged at 1.11 percent as the discount rose 0.01 percentage point to 1.10 percent. Yields on three-month Treasury bills were 1.04 percent as the discount held steady at 1.02 percent. Six-month yields were steady at 1.03 percent, as the discount slipped 0.01 percentage point to 1 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, was steady at 1.25 percent.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds was 114 1/2 with a yield to maturity of 4.77 percent, down from 4.78 percent Wednesday.

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