Originally created 01/17/04

Bonds lower as stock market is up slightly

NEW YORK -- Bond prices were lower Friday as the stock market made modest gains on news of mixed economic data.

The price of the benchmark 10-year Treasury note fell 7/16 point, or $4.38 per $1,000 in face value. Its yield rose to 4.02 percent from 3.97 percent Thursday.

The 30-year Treasury bond fell 7/16 point to yield 4.88 percent, from 4.86 percent a day earlier, according to Moneyline Telerate. Bond prices and yields move in opposite directions.

The bonds markets closed at 2 p.m. on Friday ahead of the Martin Luther King holiday on Monday.

In mid-afternoon trading, the Dow Jones industrial average was up 25 points, or 0.1 percent, at 10,578.

Broader stock indicators were higher. The Standard & Poor's 500 index up 6 points, or 0.5 percent, at 1,138, and the Nasdaq composite index was up 27 points, or 1.3 percent, at 2,136.

The modest gains followed conflicting economic data.

Consumer confidence rose to its highest level in three years in mid-January, according to the University of Michigan's index. In addition, businesses increased their inventories by a modest 0.3 percent in November, a sign of restrained confidence in the economic recovery. However, the government announced industrial production was up only 0.1 percent in December, much lower than the 0.5 percent anticipated by Wall Street and the 1 percent growth recorded in November.

In other trading, the benchmark 2-year note fell 1/16 point, yielding 1.67 percent, up from 1.64 percent on Thursday. Intermediate maturities fell between 5/16 point and 13/32 point.

Yields on one-month Treasury bills were 0.79 percent as the discount fell 0.03 percentage point to 0.77 percent. Yields on three-month Treasury bills were 0.88 percent as the discount increased 0.01 percentage point to 0.86 percent. Six-month yields were 0.96 percent, as the discount increased 0.01 percentage point to 0.94 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 1.0 percent on Friday, from 1.06 percent Thursday.


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