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CREDIT : Bond Prices Hold Steady as Investors Remain Cautious

November 19, 1987|Associated Press

NEW YORK — Prices in the government bond market were little changed Wednesday as traders waited for a final word on the federal budget negotiations in Washington.

In the secondary market for Treasury bonds, the government's bellwether 30-year issue was up 1/32 point, or about 30 cents for every $1,000 in face amount. Its yield stood at 8.92%, as it had late Tuesday.

"It's pretty lackluster," said Robert Chandross, chief economist for the North American office of Lloyds Bank in New York.

"Everybody is waiting to see what the response will be once we get the definitive word from Washington on what they're up to."

White House and congressional negotiators were still struggling to put together a two-year, $75 billion budget deficit-reduction agreement before the end of the week. But negotiators were downplaying their progress Wednesday, warning that any agreement would only satisfy the bare minimum required by the Gramm-Rudman deficit-reduction law.

If the negotiators fail to agree on a package or extend the deadline by Friday, Gramm-Rudman would automatically cut $23 billion in federal spending this year.

Analysts worried that a minimum cut would portend more problems for the financial markets, including government bonds, which are used to finance the federal debt. Without significant deficit reduction, bond traders fear the market would be glutted and prices depressed by an oversupply of bonds.

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