CREDIT : Bond Prices Edge Higher in Thin Pre-Holiday Trading

NEW YORK â€”  Bond prices rose slightly in thin, pre-holiday trading Friday, leaving the yield on the widely watched long-term Treasury issue unchanged, compared to its level a year ago.

The bellwether 30-year bond ended the year up around 1/8 point, or $1.25 per $1,000 face amount. Its yield, which moves inversely to price and is often seen as a signal of interest rate trends, fell to 8.98% from 9% late Thursday. The 30-year bond’s yield ended 1987 at 8.98% as well.

The market was described as extremely quiet, with trading ending earlier than usual in advance of the New Year’s Day holiday.

Analysts said there were little price movements and the market virtually ignored government reports showing a 0.2% drop in November leading indicators and an 8% decline in November single-family home sales.

In the secondary market for outstanding Treasury bonds and notes, prices of short-term governments rose between 1/32 point and 5/32 point, intermediate maturities rose around 5/16 point and long-term issues ranged from 1/32 point lower to 1/4 point higher, according to figures provided by Telerate Inc., a business information service.

The Shearson Lehman Hutton daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, was up 1.36 at 1,233.05. The index finished 1987 at 1,154.88.

In corporate trading, prices also strengthened marginally. Moody’s investment grade corporate bond index, which measures price movements on 80 corporate bonds with maturities of five years or longer, rose 0.13 to 293.95, putting it substantially ahead of its closing 1987 level of 268.41.

Meanwhile, yields on outstanding three-month Treasury bills dropped to 8.36% as the discount fell 2 basis points to 8.09%. Yields on six-month bills fell to 8.61% as the discount declined 5 basis points to 8.17%. Yields on one-year bills dropped to 9% as the discount fell 1 basis point to 8.34%.

A basis point is one-hundredth of a percentage point. The yield is the annualized return on an investment in a Treasury bill. The discount is the percentage that bills are selling below the face value, which is paid at maturity.

The federal funds rate, the interest on overnight loans between banks, traded at 8.75%, down from 9.50% late Thursday. The higher rate on Thursday reflected year-end demand for extra capital reserves.

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