Bonds Stage Rally as Gold Prices Fall; Interest Rates Drop across the Board
Fraust, Bart, American Banker
Interest rates fell sharply on Tuesday, as bonds rallied on a plunge in gold prices.
At 4 p.m. in New York, the yield on the Treasury's 30-year bond was down to 6.88% from 6.97%. The drop was across the board, as the five-year note fell to 5.27% from 5.36% and the two-year to 4.14% from 4.24%.
Casino, auto, and technology issues led stocks higher. The Dow Jones industrial average gained 24.91 to 3,552.34. The Standard & Poor's 500 index gained 3.64 points, to 453.83.
Federal Reserve buying stemmed the dollar's fall against the yen. The currency was at 107.05 yen, up from 106.95 on Friday. It was at 1.5865 German marks, down from 1.5875.
Bond rates rose sharply last week amid fears of inflation and a tightening of credit. Most analysts had been expecting the bond market to tread water ahead of Friday's employment reports and next week's data on producer and consumer prices.
But the fall in prices of gold and other commodities eased inflation concerns. On New York's Commodity Exchange, gold futures fell $9 to $371. …