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Bond Prices Edge Higher

July 28, 1999

NEW YORK (AP) _ Bonds edged higher Wednesday as Federal Reserve Chairman Alan Greenspan reiterated his readiness to fight inflation with higher interest rates, a message most investors expected.

The price of the benchmark 30-year Treasury bond rose 1/32 point, or 31 1/4 cents per $1,000 in face value. Its yield, which moves in the opposite direction, fell to 6.00 percent from 6.01 percent at the same point on Tuesday.

In the broader market, prices of short-term Treasury securities were between 1/32 point higher and 1/32 point lower, while intermediate-term Treasurys rose 1/16 point to 3/32 point, reported Bridge Telerate, a financial information service.

The session was mostly uneventful, with Greenspan offering no new clues in a Senate appearance as to whether the Fed might nudge its lending rates higher again.

Many traders were also awaiting some key economic data due Thursday. The government is scheduled to report on the second-quarter economic growth and a reading on employment costs, which typically account for two-thirds of a product’s price.

Last week, in his midyear report to Congress, Greenspan sent markets swooning with a warning that inflationary pressures persist. Inflation and rising interest rates make fixed-income investments like bonds less appealing.

In other trading Wednesday, yields on three-month Treasury bills eased to 4.68 percent and the discount to 4.56 percent, each falling 0.01 percentage point.

Six-month yields finished at 4.78 percent with a discount rate of 4.60 percent, up 0.03 percentage point. One-year yields were 5.01 percent with a discount of 4.76 percent, down 0.01 percentage point.

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, held steady at late Tuesday’s 4.94 percent.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds fell 3/32 to 118 21/32. The average yield to maturity rose to 5.54 percent, up from 5.53 percent late Tuesday.

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