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Bonds Prices Rise Moderately

August 17, 2000

NEW YORK (AP) _ Bond prices rose Thursday on fresh economic news indicating the Federal Reserve might not raise interest rates when it meets next week.

The price of the benchmark 10-year Treasury note rose 1/4 point, or $2.50 per $1,000 in face value. Its yield, which moves in the opposite direction, fell to 5.80 percent from 5.83 percent late Wednesday.

The 30-year Treasury bond rose 17/32 to yield 5.70 percent, down from 5.74 percent on Wednesday, according to Bridge Telerate news service.

The Labor Department reported Thursday that 313,000 laid-off American workers filed claims for jobless benefits last week, an increase of 14,000 from the week ended Aug. 5.

The figures ``are showing a clear pattern of increase ... at a very mild rate,″ said economist Ken Mayland, president of ClearView Economics LLC in Cleveland.

The increase in joblessness is indicative of ``this long-awaited economic slowdown process beginning to take hold,″ he suggested.

That could mean the Federal Reserve is less likely to raise interest rates when it meets Aug. 22.

Higher interest rates hurt bonds which pay a fixed rate of return.

In other trading, short-term Treasurys were unchanged to up 1/32 point, while intermediate maturities were up 3/32 point to 1/4 point.

Yields on three-month Treasury bills were 6.25 percent as the discount rose 0.01 percentage point to 6.08 percent from Wednesday. Six-month yields were 6.31 percent, as the discount fell 0.02 percentage point at 6.04 percent from Wednesday. One-year yields were 6.16 percent as the discount fell 0.01 percentage point from Wednesday’s 5.87 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 6.44 percent, down from 6.50 percent on Wednesday.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds rose 1/16 to 98 29/32 points. The average yield to maturity was unchanged at 5.76 percent.

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