NEW YORK — Bond prices fell marginally Wednesday in light trading, reflecting fresh uncertainty over the outlook for interest rates and the economy's direction.
The Treasury's 30-year issue lost about $2 per $1,000 in face amount. Its yield, which moves inversely to price and is considered a sign of interest rate trends, rose to 8.48% from 8.46% Tuesday.
Bond prices generally had been rising and interest rates falling this year until last Friday, when economic statistics suggested that the economy isn't slowing down significantly despite the stock market crash in October.
Signs of a slowdown or impending recession often rally the bond market because they imply the Federal Reserve will ease credit conditions. But Fed Chairman Alan S. Greenspan obscured the Fed's intentions on Tuesday when he said that important features of the economy seem stable. Bond prices fell as a result.
On the other hand, fresh economic evidence reported Wednesday suggested that recession remains a possibility. The Commerce Department said housing construction fell in January to the lowest level since the end of the last recession, and the Fed said industrial production grew only marginally.
"I think the whole range of numbers have gone from imminent recession to that of a more balanced approach, so we don't know where we're going," said William Veronda, director of fixed-income investments at Financial Programs in Denver. "It's really painted a mixed bag."
In the secondary market for Treasury bonds, prices of short-term governments were unchanged, intermediate maturities fell 1/32 point and long-term issues fell about 3/16 point, the financial information service Telerate Inc. said.
The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.
In corporate transactions, industrials were largely unchanged and utilities fell 1/8 point in light trading.
Among tax-exempt municipal bonds, general obligations fell about point and revenue bonds were unchanged, municipal traders said. Business was light.
Yields on three-month Treasury bills were unchanged at 5.73%. Six-month bills fell 4 points to 5.98% and year bills were unchanged at 6.29%.
The federal funds rate, the interest on overnight loans between banks, traded at 6.675%, down from 7% Tuesday.
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