NEW YORK -- Bond prices slipped Friday as investors sold Treasury securities to profit from a day-earlier rally that pushed the yield on the 30-year bond back below 6 percent.
The price of the benchmark 30-year Treasury bond, which shot up 1 9/32 points on Thursday, dropped 1/8 point, or $1.25 per $1,000 in face value. Its yield, which moves in the opposite direction, rose to 5.97 percent from 5.96 percent late Thursday.Traders sold bonds at prices driven higher by the market rally, which was triggered by investor relief over appearances that interest rate increases would be kept to a minimum by the Federal Reserve. Higher rates tend to hurt the value of bonds and other Treasury securities that pay a fixed rate of return.
Federal Reserve chairman Alan Greenspan on Thursday hinted that the central bank would raise rates at its meeting later this month but was vague as to whether rates would climb again later this year. His comments came a day after the Labor Department reported that May consumer prices rose only slightly, easing concerns that a surge in inflation would spur the Fed to raise rates substantially to check price increases in the economy.
In the broader bond market, prices of short-term Treasury securities were up 1/8 point to 5/32 point and intermediate maturities were up 9/32 point, reported Bridge Telerate, a financial information service.
Yields on three-month Treasury bills were 4.65 percent as the discount rose 0.02 percentage point to 4.53 percent. Six-month yields were 4.96 percent, as the discount rose 0.02 percentage point to 4.77 percent. One-year yields were 4.96 percent as the discount rose 0.03 percentage point from late Thursday to 4.72 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 4.69 percent from 4.75 percent late Thursday.