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Bond Prices Rise

November 30, 1988

NEW YORK (AP) _ Bond prices edged higher in moderate trading this morning, helped by a stronger dollar and speculation that the economy is growing at a restrained pace.

The Treasury’s 30-year bond was up 3-16 point, or about $2 for every $1,000 in face amount, at midday. Its yield, which moves in the opposite direction from its price, slipped to 9.11 percent from 9.13 percent late Tuesday.

Analysts said strength in the dollar in European trading today helped support bond prices. A rising dollar boosts the yields available to foreign investors in dollar-denominated securities.

Elliott Platt, research director for Donaldson Lufkin & Jenrette Securities Corp., said another reason for the rise was that some traders were speculating that the November employment figures to be released on Friday would show a more modest inrease in payroll growth than had been expected earlier.

″Those who feared we may get 300,000 are now thinking that we may get only 200,000,″ Platt said.

He said a new economic report today that Americans’ personal income rose 1.8 percent in October had no effect on bond prices.

In the secondary market for Treasury bonds, prices of short-term issues were up 1-16 point, intermediate maturities rose 5-32 point and 20-year issues were up 3-16 point, according to Telerate Inc., a financial information service.

The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

The Shearson Lehman Daily Treasury Bond Index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, was up 1.72 at 1,134.32.

In corporate trading, industrials were also up. Moody’s Investment Grade Corporate Bond Index, which measures price movements on 80 corporate bonds with maturities of five years or longer, rose 0.12 to 293.40.

Yields on three-month Treasury bills fell to 8.15 percent as the discount tumbled 8 basis points to 7.89 percent. Yields on six-month bills fell to 8.48 percent as the discount slid 4 basis points to 8.03 percent. Yields on one- year bills fell to 8.66 percent as the discount fell 3 basis points to 8.04 percent.

A basis point is one-hundredth of a percentage point. The yield is the annualized return on an investment in a Treasury bill. The discount is the percentage that bills are selling below the face value, which is paid at maturity.

The federal funds rate, the interest on overnight loans between banks, was quoted at 8 7-16 percent, up from 7 7/8 percent late Tuesday.

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