Bonds Tumble As Dollar Sinks
NEW YORK (AP) _ Bond prices plunged Wednesday after the United States and Japan intervened in currency markets to prop up the beleaguered Japanese yen, pushing the dollar lower.
A sharp rebound in the stock market also robbed U.S. Treasury securities of some of their appeal as a safe-haven investment. The Dow Jones industrial average jumped 164.17 points to close at 8,829.46.
The dollar sank more than seven yen against the yen. The intervetion came after the Japanese currency had entered a seemingly irreversible slump, threatening both the fragile Japanese economy as well as hopes for an economic recovery in Asia.
After nearly hitting an eight-year high this week, the dollar was changing hands at 136.37 yen in late New York trading Wednesday, compared with 143.47 yen Tuesday.
The price of the benchmark 30-year Treasury bond fell 1 3/8 point, or $13.75 per $1,000 in face value. Its yield, which moves in the opposite direction, rose to 5.74 percent from 5.66 percent late Tuesday.
The stock market’s slump on Monday had sent the long bond’s yield down to 5.58 percent, an all-time low, as investors fled to the relative safety of U.S. Treasury securities.
In the broader market, prices of short-term Treasury securities were down between 1/8 point and 3/16 point, and intermediate maturities were down 13/32 point to 23/32 point, reported Bridge Telerate, a financial information service.
The Lehman Brothers Daily Treasury Bond Index, reflecting price movements on bonds with maturities of a year or longer, was down 5.60 points to 1,284.63.
Yields on three-month Treasury bills were 5.20 percent as the discount rose 0.04 percentage point to 5.07 percent. Six-month yields were 5.33 percent, as the discount rose 0.04 percentage point to 5.13 percent. One-year yields were 5.40 percent as the discount rose by 0.03 percentage point from late Tuesday to 5.14 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 5.50 percent from 5.63 percent late Tuesday.
In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds fell 1 point to 123 23/32. The average yield to maturity rose to 5.23 percent from 5.18 percent.