NEW YORK — Bond prices edged lower in quiet trading Wednesday, retreating late in the session after being little changed for much of the day.
The Treasury's closely watched 30-year bond slipped about point, or $2.50 for every $1,000 in face value. The yield on the issue rose to about 8.38% from 8.34% on Tuesday.
Market analysts said prices of short-term issues were pressured by the Treasury's auction of $8.78 billion in new two-year bills, which increased the supply of such securities on the market.
Some market participants likely limited their activity as Alan S. Greenspan, chairman of the Federal Reserve Board, finished a second day of congressional testimony on the central bank's monetary policy. But Greenspan's testimony had less effect on bond markets than it did on Tuesday, when prices rallied following his confirmation that the Fed had eased credit slightly several weeks ago.
Damper on Activity
Activity also was dampened by the impending release Thursday of a revised gross national product estimate for the fourth quarter of 1987, analysts said. The 4.2% growth estimate for the quarter was expected widely to be revised upward to reflect an increase in business inventories during the period.
Analysts said the market largely ignored the Commerce Department's report Wednesday that the fourth-quarter U.S. trade deficit fell by $200 million on a balance-of-payments basis.
In the secondary market for Treasury bonds, prices of short-term governments were down in the range of 1/16 point to 1/8 point; intermediate maturities fell by 1/8 point to 7/32 point, and 20-year issues were down 1/16 point, according to the Telerate financial information service.
The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.
The Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, fell 0.04 to 113.74. The Shearson Lehman daily Treasury bond index, which makes a similar measurement, fell 1.56 to 1,188.26.
In corporate trading, industrials and utilities were down 1/8 point in light trading.
Among tax-exempt municipal bonds, general obligations were unchanged and revenue bonds rose 1/8 point in light trading.
Yields on three-month Treasury bills were unchanged at 5.63%. Six-month bills were unchanged at 5.79%, and one-year bills were up 3 basis points at 6.20%. A basis point is one-hundredth of a percentage point.
The federal funds rate, the interest on overnight loans between banks, traded at 6.313%, down from 6.563% Tuesday.
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