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Bond Prices Slip Lower

November 25, 1987

NEW YORK (AP) _ Bond prices drifted lower Wednesday on the eve of the Thanksgiving holiday.

Market-watchers said activity was sluggish, as many traders took the day off or left early.

That caused prices to become somewhat skewed by the limited amount of trading, which also carried a downward bias.

Ray Carso, a trader with Harris Trust and Savings Bank in Chicago, said many dealers did not want to be left holding long positions over the next four days, ″so they started selling - but there were not a lot of buyers out there.″

The Treasury’s closely watched 30-year bond was down 19-32 point, or about $6 for every $1,000 in face value, to yield 9.05 percent, according to Telerate, a financial information service. On Tuesday, the bond closed about $10 lower. Its yield, which moves inversely to its price, stood at 8.99 percent.

Maria F. Ramirez, a managing director of the Drexel Burnham Lambert Inc. securities firm in New York, said the market was also dampened by an overhang of five-year notes left over from Tuesday’s Treasury auction.

The notes, which carried an average yield of 8.30 percent Tuesday, were down 11-16 point to yield 8.43 percent Wednesday.

In the secondary market for Treasury bonds, prices of short-term governments fell 1-16 point, intermediate maturities fell 5-16 point and long- term issues were down 13-16 point, according to Telerate.

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 Merrill Lynch Daily Treasury Index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, fell 0.31 to 109.92. The Shearson Lehman Daily Treasury Bond Index, which makes a similar measurement, fell 2.50 to 1,150.22.

Late corporate bond figures were unavailable. At midday, however, industrials were off 1/4 point and utilities were down 1/8 in very thin trading.

Late yields on three-month Treasury bills were down 10 basis points to 5.847 percent. A basis point is one-hundredth of a percentage point. Six-month bills rose 7 basis points to 6.15 percent and one-year bills were up 3 basis points at 7.01 percent.

The federal funds rate, the interest on overnight loans between banks, traded at 6 11-16 percent, down from 6 3/4 percent late Tuesday.

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