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Bond Prices Mostly Higher

October 28, 2002

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NEW YORK (AP) _ Bond prices were mostly higher Monday after reports in two newspapers hinted that the Federal Reserve may cut short-term interest rates before the end of the year to give a lift to the sagging economy. The bond market was also buoyed by falling stock prices.

The Wall Street Journal and the Washington Post reported Monday that Fed officials are concerned that the country’s economic recovery has stalled.

The price of the benchmark 10-year Treasury note rose 1/32 point or 31 cents per $1,000 in face value. Its yield remained steady at 4.09.

The 30-year Treasury bond fell 5/16 point or 3.19 cents per $1,000 in face value, and the yield rose to 5.11 percent from 5.09 percent Friday, according to Moneyline Telerate.

In equities trading, the Dow Jones industrial average fell 75.95 points to close at 8,368.04. The Nasdaq composite index declined 15.30 to 1,315.83.

In other trading Monday, the benchmark 2-year note gained 5/32 point. Its yield fell to 1.90 percent from 1.98 percent Friday. Intermediate maturities ranged between 5/32 point and 7/32 point higher.

Yields on one-month Treasury bills were 1.58 percent as the discount fell 0.04 percentage point to 1.57 percent. Yields on three-month Treasury bills were 1.59 percent as the discount dropped 0.05 to 1.56 percent. Six-month yields were 1.55 percent, as the discount slid 0.07 to 1.52 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, held steady at 1.81 percent.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds fell 23/32 to 105 15/32. The average yield to maturity was 5.20 percent, up from 5.16 percent.

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