Jim, bonds go higher and yield goes lower today as inflation is still nonexistant. Hope this helps INTC and AMAT a little. Jeff
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Top Financial News
Fri, 26 Feb 1999, 1:11pm EST
Treasury Bonds Climb as High Yields, Slow Inflation Lure Investors
U.S. Bonds Rise; Yields at 6-Month Highs Lure Buyers (Update3)
(Updates prices. Adds comment from economist in 5th
paragraph.)
New York, Feb. 26 (Bloomberg) -- U.S. bonds rose, snapping a
three-day slide, as the highest yields since August and a report
showing scant inflation lured buyers.
''We expect inflation to stay very benign,'' said David
Berry, who oversees $35 billion of bonds at Lincoln Investment
Management Inc. in Fort Wayne, Indiana. He's been buying and said
these yields are ''attractive.''
The 30-year Treasury bond rose 26/32 points, or $8.13 per
$1,000 bond, to 95 1/32. Its yield fell 6 basis points to 5.59
percent. Even after today's gains, Treasuries in February
suffered their biggest monthly losses since 1980, according to
Ryan Labs Inc., a research firm.
Bonds rallied today as the government said a key inflation
gauge rose 1 percent last year, the smallest increase since 1949.
Slow inflation allows bonds to hold more value. Yet the report
also showed the economy hummed along at a 6.1 percent annual rate
in the fourth quarter, faster than first estimated. That follows
reports this month on jobs, housing and manufacturing that
indicate growth isn't letting up in 1999.
Analysts said the market's swoon may not be over, especially
because a report next week is expected to show healthy job gains
in February. ''It's way too soon to say that because of today's
rebound we're out of the woods,'' said Anthony Karydakis, an
economist at First Chicago Capital Markets.
Fed Watching
Evidence of a strong economy sparked concern that the
Federal Reserve might raise interest rates later in the year to
keep the economy from overheating. Fed Chairman Alan Greenspan
added to that concern when he said the central bank has to
evaluate whether its three interest-rate cuts last year remain
''appropriate.'' Greenspan's remarks came during his semiannual
testimony to Congress Tuesday.
Fed Governor Laurence Meyer spurred losses yesterday
suggested the Fed's 4.75 percent target for overnight bank
lending - the federal funds rate -- may be too low.
Bond investors reacted to such remarks by selling, sending
the 30-year Treasury yield as high as 5.65 percent yesterday, a
rise of 57 basis points since the start of the month. That lured
some buyers today.
''At some point you find a level where you attract some
interest,'' said Dave Connors, head of government bond trading at
Credit Suisse First Boston Corp. in New York.
Edgar Peters, who oversees $16 billion of stocks and bonds
at PanAgora Asset Management in Boston, said he's been buying.
''As bond yields come up like this, they become
attractive,'' he said.
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