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Bonds Rise Despite Stock Surge

October 20, 2000

NEW YORK (AP) _ Bond prices rose Friday, despite a rising stock market, as some investors remained spooked by tensions in the Middle East and the possibility of more downturns on Wall Street.

Traders said recent whipsaws on the stock market have caused enough alarm among investors to keep bond prices high for now. Investors often seek the safety of U.S.-government backed Treasury bonds when stock markets become volatile.

The Dow Jones industrial average recovered from early losses Friday to close up 83.61 at 10,226.59.

The price of the benchmark 10-year Treasury note rose 5/32 point, or $1.56 per $1,000 in face value. Its yield, which moves in the opposite direction, fell to 5.63 percent compared with 5.65 percent late Thursday.

The 30-year Treasury bond rose 13/32 point to yield 5.72 percent, down from 5.75 percent a day earlier, according to Bridge Telerate news service.

In other trading, short-term Treasury securities were unchanged.

Yields on three-month Treasury bills were 6.28 percent as the discount fell 0.01 percentage point to 6.11 percent. Six-month yields were 6.27 percent, as the discount was unchanged at 6.01 percent. One-year yields were 5.93 percent as the discount fell by 0.01 percentage point from late Wednesday to 5.64 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 6.44 percent from 6.56 percent.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds rose 8/32 point to 99 5/16. The average yield to maturity fell to 5.75 percent from 5.77 percent.

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