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CREDIT : Report on Budget Surplus Nudges Bond Prices Higher

February 23, 1988|Associated Press

NEW YORK — Bond prices finished modestly higher in mostly thin trading Monday, drawing some support from a report showing a larger than expected surplus in the federal government's budget for January.

The Treasury's closely watched 30-year issue rose about point, or $2.50 for every $1,000 in face value. Its yield, which moves inversely to its price, slipped to 8.41% from 8.43% Friday.

Bond prices started the trading day unchanged to slightly lower as investors awaited more economic news. But analysts said prices turned upward after the Treasury's announcement that the government posted a $16.09-billion surplus last month, mainly because Social Security checks for January were mailed early.

The department said the January surplus, the first since September, was a sizable improvement over a December deficit of $24.22 billion.

"I think the market took some comfort from that," said William Sullivan, director of money market research for Dean Witter Reynolds.

He said market participants had expected a smaller January surplus of about $10 billion to $15 billion.

Maria F. Ramirez, a managing director of Drexel Burnham Lambert, said investors were reluctant to take any major positions before the release of other economic data and this week's scheduled congressional testimony by Federal Reserve Chairman Alan S. Greenspan.

The government will issue reports throughout the week on durable goods orders, consumer prices, the gross national product and personal income.

Greenspan is to give the Fed's semiannual Humphrey-Hawkins testimony today.

In the secondary market for Treasury bonds, prices of short-term government issues edged up 1/32 point to 1/16 point, intermediate maturities rose 5/32 point to point and 20-year issues advanced 5/16 point, according to Telerate Inc., a financial data service.

The federal funds rate, the interest on overnight loans between banks, was quoted late in the day at 6.688%, unchanged from Friday.

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