FINANCIAL MARKETS : CREDIT : Greenspan Remarks Lift Bond Prices
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Bond prices were mostly higher in light trading after Federal Reserve Board Chairman Alan Greenspan made remarks that the market interpreted to mean the Fed won’t raise interest rates soon.
The Treasury’s benchmark 30-year bond rose 9/32 point, or about $2.81 per $1,000 face amount, as its yield fell to 8.99% from 9.02% late Friday.
Greenspan, speaking to the National Assn. of Purchasing Management convention in New Orleans, said he believes that there will be “somewhere between modest and moderate growth in factory output over the coming year.”
Traders and economists interpreted the remark to mean that the Fed won’t see the need soon to nudge interest rates higher to stem inflation. Higher market rates hurt the value of fixed-return investments such as bonds.
The federal funds rate, the interest rate banks charge each other on overnight loans, was quoted at 8.188%, unchanged from Friday.
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