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Bonds Prices Fall As Stocks Rise

June 20, 2003

NEW YORK (AP) _ Bond prices traded lower Friday as stocks made a modest comeback amid investors’ growing confidence and anticipation of another reduction in interest rates next week.

The price of the benchmark 10-year Treasury note fell 3/16 point, or $1.88 per $1,000 in face value. Its yield, which moves in the opposite direction, rose to 3.37 percent, up from 3.34 percent late Thursday.

The 30-year Treasury bond fell 13/32 point to yield 4.43 percent, up from 4.41 percent a day earlier, according to Moneyline Telerate.

The Dow Jones industrial average closed up 21 points at 9,201. The market’s broader indicators were mixed. The Standard & Poor’s 500 index rose 1 point, to close at 996. The Nasdaq composite index fell 4 points to close at 1,645.

In other bond trading, the benchmark 2-year note fell 1/32 point to yield 1.17 percent, up from 1.15 percent on Thursday. Intermediate maturities fell between 5/32 point and 3/32 point.

Yields on one-month Treasury bills were 0.81 percent as the discount fell 0.01 percentage point to 0.80 percent. Yields on three-month Treasury bills were 0.82 percent as the discount increased 0.01 percentage point to 0.81 percent. Six-month yields were 0.84 percent, as the discount increased 0.02 percentage point to 0.82 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 1.31 percent, up from 1.25 percent on Thursday.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds fell 5/16 point to 113 3/4 from 114 1/16. The average yield to maturity rose to 4.82 percent on Friday from 4.81 percent a day earlier.

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