Bond prices snapped a five-day losing streak Friday as investors were enticed by the most attractive yields in more than a month and gains by the dollar against the Japanese yen.
The price of the benchmark 30-year Treasury bond rose 19/32 point, or $5.94 per $1,000 in face value. Its yield, which moves in then opposite direction, fell to 5.94 percent from late Thursday's rate of 5.98 percent.Treasury securities have been under pressure all week as demand was siphoned away by a flood of corporate sales in a market that lacked any significant inflation news to guide trading.
But investors jumped in Friday with the yield on the long bond approaching the 6 percent mark - a level it has not crossed since early March. The buying was boosted as the dollar rose against the yen, making U.S. assets more attractive to Japanese investors.
Some bond market participants who also had bet that prices would continue to fall were forced to buy Treasuries to limit their losses, prompting what is known as a short-covering rally.
The dollar rose against the Japanese yen, reflecting traders' disappointment with the Japanese government's $127 billion economic stimulus package. But overall the currency was mixed.
In the broader market, prices of short-term securities were up 3/32 point to 1/8 point, while intermediate maturities were up 5/32 point to 5/16 point, reported Dow Jones Markets, a financial information service.
The Lehman Brothers Daily Treasury Bond Index, reflecting price movements on bonds with maturities of a year or longer, rose to 1,276.60 from 1,274.66.
Yields on three-month Treasury bills were 5.05 percent as the discount fell 0.03 percentage point to 4.93 percent. Six-month yields were 5.25 percent as the discount rose 0.01 percentage point to 5.06 percent. One-year yields were 5.38 percent as the discount fell 0.01 percentage point to 5.38 percent.
Yields are the interest bonds pay by maturity, while the discount is the interest at which they are sold.
The federal funds rate, the interest on overnight loans between banks, fell to 5.50 percent from late Thursday's rate of 5.56 percent.
In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds rose 5/32 to 121 19/32. The average yield to maturity fell to 5.34 percent from 5.35 percent.