Bond prices rose Friday as more encouraging news about inflation and the economy eased fears the Federal Reserve was poised to raise interest rates.
The price of the benchmark 30-year Treasury bond closed up 1/4 point, or $2.50 per $1,000 in face value. Its yield, which moves in the opposite direction, fell to 5.93 percent from late Thursday's rate of 5.94 percent.Reports on manufacturing, construction, and personal income and spending reinforced views that the economy isn't growing at an inflationary pace - giving the Fed less reason to raise interest rates.
Bond prices had tumbled Monday and rates shot up above 6 percent to the highest level in seven weeks after The Wall Street Journal reported that Fed policy-makers were paving the way for a rate increase to forestall inflation.
But those concerns were offset by a report Thursday that showed employment costs, a key inflationary concern for Fed policy-makers, remain well-behaved despite a tight labor market. Data Friday also were encouraging.
In the broader market, prices of short-term securities were up unchanged, while intermediate maturities were up 3/32 point to 1/4 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 1,277.18 from 1,267.80.
Yields on three-month Treasury bills were 5.00 percent as the discount rose 0.03 percentage point to 4.88 percent. Six-month yields were 5.24 percent as the discount rose 0.02 percentage point to 5.05 percent. One-year yields were 5.39 percent as the discount rose 0.01 percentage point to 5.39 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, held at 5.63 percent.
In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds rose 17/32 to 121 7/32. The average yield to maturity fell to 5.37 percent from 5.39 percent.