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Bonds Mostly Lower

May 8, 2001

NEW YORK (AP) _ U.S. Treasurys were mostly lower on Tuesday after a report on worker productivity raised concerns about near-term inflation and a report that WorldCom Inc. would issue roughly $10 billion worth of bonds on Wednesday.

The price of the benchmark 10-year Treasury note fell 5/16 point, or $3.13 per $1,000 in face value. Its yield, which moves in the opposite direction, rose to 5.23 percent compared with 5.19 percent late Monday.

The 30-year Treasury bond fell 11/16 point to yield 5.72, compared with 5.67 percent on Monday, according to Bridge Telerate news service.

The Labor Department reported Tuesday that productivity _ the amount of output per hour of work _ in the first quarter fell for the first time in six years. However, economists said the Federal Reserve would likely cut interest rates for a fifth time this year when policy-makers meet next Tuesday.

Also on Tuesday, MCM CorporateWatch said WorldCom priced three-year, 10-year and 30-year notes at margins higher than comparable Treasurys by 215 basis points, 245 basis points and 265 basis points, respectively.

In other trading, short-term Treasury securities were unchanged to 1/32 point higher, while intermediate maturities declined between 1/32 point and 1/8 point.

Yields on three-month Treasury bills were 3.67 percent as the discount fell 0.02 percentage point to 3.60 percent. Six-month yields were 3.67 percent, as the discount fell 0.01 percentage point to 3.57 percent. One-year yields were 3.66 percent as the discount fell by 0.02 percentage point from late Monday to 3.54 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, declined to 4.44 percent from 4.50 percent.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds rose to 102 7/16 from 101 7/16. The average yield to maturity fell to 5.45 percent from 5.49 percent from Monday.

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