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Bonds Rise on Recovery by Dollar

September 17, 1999

NEW YORK (AP) _ Bond prices rose Friday thanks to a recovery in the dollar and easing concerns about further rate increases from the Federal Reserve.

The price of the benchmark 30-year Treasury bond rose 13/32 point, or $4.06 per $1,000 in face value. Its yield, which moves in the opposite direction, fell to 6.04 percent from 6.07 percent Thursday, when trading closed early as Hurricane Floyd moved up the East Coast.

The dollar rebounded against the yen for the second straight day Friday. Currency traders anticipated that Japan’s central bank would move to check the rocketing rise of the yen, which could threaten Japan’s economic recovery.

Bond prices benefited from the dollar’s comeback as purchasers of dollars sought safe, liquid investments for their dollar purchases. Also, expectations that Fed policy-makers would leave rates untouched at their Oct. 5 meeting helped boost bond prices.

In the broader market, prices of short-term Treasury securities were up between 1/32 point and 3/32 point, and intermediate maturities were up 1/16 point to 9/32 point, reported Bridge Telerate, a financial information service.

Yields on three-month Treasury bills were 4.64 percent as the discount fell 0.04 percentage point from Thursday to 4.52 percent. Six-month yields were 5.04 percent, as the discount rose 0.02 percentage point to 4.85 percent. One-year yields were 5.21 percent as the discount was unchanged at 4.94 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 5.06 percent from 5.44 percent late Thursday.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds rose 1/8 point to 113 3/16. The average yield to maturity fell to 5.85 percent from 5.86 percent.

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