Bonds
Sunday, February 1, 2004; Page F09
Bonds
Bond prices tumbled last week after the Federal Reserve made clear it is not holding interest rates at rock-bottom levels indefinitely. Then they rebounded a bit as a bunch of weak economic reports showed that the Fed has no reason to move any time soon.
The Fed scrapped its commitment to hold rates low for "a considerable period," saying instead that it "believes it can be patient" in waiting for signs of a stronger economy before moving them upward. But after seeing disappointing fourth-quarter growth and inflation still falling by some measures, Fed officials may end up being patient for a considerable period anyway. By the end of the week, Treasury yields across the curve were higher, with the yield on the benchmark 10-year note up 6 basis points.
Tomorrow, Treasury will sell $19 billion in three-month bills and $17 billion in six-month bills, which yielded 0.93 percent and 1.02 percent, respectively, in when-issued trading Friday. Also tomorrow, Treasury will announce details of an auction of four-week bills to be held Tuesday.
-- Nell Henderson
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