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Bonds Prices Drop Sharply

November 22, 2002

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NEW YORK (AP) _ Bond prices were mostly lower Friday, even as the stock market retrenched.

The price of the benchmark 10-year Treasury note dropped 7/32 point, or $2.19 per $1,000 in face value. Its yield, which moves in the opposite direction, rose to 4.18 percent from 4.15 percent on Thursday.

The 30-year Treasury bond was unchanged from a day earlier to yield 5.02 percent, according to Moneyline Telerate.

The Dow fell 40 points, or 0.5 percent, to close at 8,805, to snap a two-day gain of 370 points. On Thursday, the average closed at their highest level since Aug. 26, when it stood at 8,919.01.

The broader market finished mixed. The Nasdaq composite index inched up 1, or 0.1 percent, to nearly 1,469, after closing Thursday at a level not seen since July. The Standard & Poor’s 500 index declined 3, or 0.3 percent, to almost 931.

In other trading, the price of the benchmark 2-year note dropped 1/16 point, while the yield was up to 2.06 percent from 2.03 a day earlier. Intermediate maturities fell between 5/32 point and 3/16 point.

Yields on one-month Treasury bills were 1.22 percent as the discount was unchanged at 1.20 percent. Yields on three-month Treasury bills were 1.22 percent as the discount remained virtually the same at 1.20 from Thursday. Six-month yields were 1.28 percent, as the discount remained the same to 1.25 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 flat at 1.25 percent.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds dropped 1/8 to 106 25/32 from 106 29/32. The average yield to maturity was unchanged at 5.13 percent Friday.

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