Bonds Retreat As Stocks Advance
Apr. 07, 2003
NEW YORK (AP) _ Bond prices slipped Monday, as investors flocked to stocks on hopes the war in Iraq would soon come to an end.
The price of the benchmark 10-year Treasury note fell 5/32 point, or $1.56 per $1,000 in face value. Its yield, which moves in the opposite direction, rose to 3.98 percent from 3.96 percent late Friday.
The 30-year Treasury bond fell 1/16 point to yield 4.97 percent, steady from the previous session, according to Moneyline Telerate.
Analysts said investors were reacting to news that coalition forces had seized a presidential palace in Baghdad. The action suggested the war was going well for U.S.-led troops, and sent stocks surging. A late burst of profit-taking, however, cut the advance short.
The Dow Jones industrial average closed up 23 points at 8,300, after rising as much as 243 earlier in the session. The Nasdaq composite index rose 6 points to nearly 1,390, while the Standard & Poor's 500 index gained 1 point to 880.
The benchmark 2-year note slipped 3/32 point to yield 1.60 percent. Intermediate maturities slipped 3/16 point and 7/32 point.
Yields on one-month Treasury bills were 1.19 percent as the discount rose 0.03 percentage point to 1.17 percent. Yields on three-month Treasury bills were 1.16 percent as the discount gained 0.05 percentage point to 1.13 percent. Six-month yields were 1.16 percent, as the discount advanced 0.06 percentage point to 1.13 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 unchanged at 1.25 percent.
In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds was down 1/2 to 109 from 109 1/2 Friday. The average yield to maturity rose to 5.09 percent from 5.06 percent Friday.