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CREDIT : Bonds Remain Steady as Traders Await Outcome of Budget Talks

November 18, 1987|Associated Press

NEW YORK — Bond prices finished little changed Tuesday in lethargic trading as investors stayed mainly on the sidelines while negotiators in Washington kept trying to work out a compromise on trimming the federal budget deficit.

The Treasury's key 30-year bond was down about $2.50 per $1,000 in face value. Its yield, which moves inversely to its price, rose to 8.92% from 8.89% late Monday.

"The bond market went through another dull and listless session," said Anthony Naylor, senior vice president of fixed-income securities at Rodman & Renshaw Inc. in New York.

Bond prices opened on a down note after the dollar's poor performance overseas. A weak dollar can ignite higher inflation, which erodes the value of fixed-income securities and makes dollar-denominated bonds and notes less attractive to foreign investors.

But traders then turned their attention to Washington, continuing to await concrete action on a deficit-cutting compromise.

"People are waiting for developments" on trimming the budget deficit before Friday's forced cuts under the Gramm-Rudman deficit-reduction law, Naylor said. "Activity seems to be centered on what comes out."

In the absence of any solid news from Washington, analysts said bond prices inched up and down on rumors about the budget talks.

The federal funds rate, the interest on overnight loans between banks, traded at 6%, down sharply from 6.938% late Monday.

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