NEW YORK — Bond prices fell Wednesday in response to a government report indicating continued strong economic growth, which rekindled worries about a rise in inflation.
The Treasury's closely watched 30-year bond lost 9/16 point, or about $5.60 for every $1,000 in face value. Its yield, which is often an indicator of interest rate trends, jumped to 9.23% from 9.18% late Tuesday.
The Commerce Department reported early in the day that the nation's gross national product expanded at a brisk 3.1% rate during the second quarter.
The report touched off a sharp decline in bond prices, whose value tends to be eroded by inflation. Prices bounced back around midday, however, as investors grew confident that the GNP figure was at or below market expectations.
In the secondary market for Treasury bonds, prices of short-term government issues declined 5/32 point to point, intermediate maturities fell 7/32 point to 5/16 point and 20-year issues lost 7/16 point, according to Telerate Inc.
Funds Rate Down
The movement of a point is equivalent to a change of $10 in the price of a $1,000 bond.
The Shearson Lehman daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, dropped 2.52 to 1,135.46.
Moody's investment grade corporate bond index, which measures price movements on 80 corporate bonds with maturities of five years or longer, was down 0.59 at 281.92.
Three-month Treasury bills, meanwhile, jumped 8 basis points to a discounted rate of 6.99% and a yield of 7.20%. Six-month bills rose 6 basis points to a discounted rate of 7.15% and a yield of 7.51%, while one-year bills also gained 6 basis points to 7.33% to yield 7.84%.
The federal funds rate, the interest on overnight loans between banks, was quoted at 7.375%, down from 7.75% late Tuesday.
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