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FINANCIAL MARKETS : Credit : Bonds Mixed in Light Trading; New Issues Concern Investors

September 29, 1987|Associated Press

NEW YORK — Bond prices finished mixed in light trading Monday, buffeted by concern about the new supply of government issues.

The Treasury's closely watched 30-year issue edged up 1/16 point, or about 62 cents per $1,000 in face value. Its yield was unchanged from late Friday at 9.66%.

Analysts said investors were concerned about whether the market could handle the onslaught of new bonds and notes to be offered once President Reagan signs a bill raising the national debt limit.

The government last week postponed the sale of $12.8 billion of three- and six-month bills and $23.25 billion of "mini-refunding" notes. In addition, another $12.8 billion of three- and six-month notes and $9.25 billion of one-year bills are to be auctioned this week.

Analysts say it will be difficult to absorb these new issues without a further rise in interest rates.

Yields rose Monday on short-term Treasury bills in auctions that had been postponed from last week.

On the other hand, the dollar's strength Monday in foreign exchange markets was a supportive factor for bond prices, traders said. A more robust U.S. currency makes dollar-denominated assets such as bonds and notes more attractive to foreign investors.

"I would definitely term today a tug-of-war," said Jay Goldinger, an investment broker for Cantor, Fitzgerald & Co. in Beverly Hills. "The bulls had their way half of the time, and the bears had their way the other half of the time."

Yields on outstanding three-month Treasury bills, meanwhile, were unchanged at 6.52%; six-month bills rose 3 basis points to 6.90%, and one-year bills declined 2 basis points to 7.18%.

The federal funds rate, the interest on overnight loans between banks, was quoted late in the day at 7.44%, up from 7.31% late Friday.

Prices of short-term government issues were unchanged to 1/32 point higher; intermediate maturities were 1/16 point lower to 1/8 point higher, and 20-year issues fell 5/32 point, according to investment firm Salomon Bros.

In corporate trading, industrials slipped 1/8 point and utilities were unchanged in light trading, Salomon Bros. said.

Among tax-exempt municipal bonds, general obligations were unchanged and revenue bonds gained point in light activity.

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