CREDIT : Bond Prices Edge Higher in Dull Trading

NEW YORK — Bond prices drifted higher in lackluster trading Wednesday, with most of the gains in longer-maturing issues.

The Treasury’s 30-year bond rose about 3/8 point, or $3.75 per $1,000 face amount, while its yield dropped to 9.28% from 9.33% late Tuesday. The bellwether issue rose about $1.87 in Tuesday’s session.

Sung Won Sohn, chief economist for Norwest Corp. in Minneapolis, attributed the improvement to technical factors and speculation that Japanese investors were becoming more attracted to U.S. bonds, where yields have risen sharply in recent weeks due to inflation fears.

However, he said, trading was dull in advance of a revised report on the first-quarter gross national product due out today. The market consensus is the report will show the economy grew between 2.7% and 3% during that period.

In addition, Sohn said, many traders were reluctant to take any major portfolio positions as the three-day Memorial Day holiday approached.

In the secondary market for Treasury bonds, prices of short-term governments were unchanged to 1/32 point higher, intermediate maturities ranged 1/32 point to 3/16 point higher and long-term issues were up point to 3/8 point, according to figures provided by Telerate Inc., a business information service.

Federal Funds Rate Higher

The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

The Merrill Lynch daily Treasury index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, rose 0.13 to 108.61. The Shearson Lehman Hutton daily Treasury bond index, which makes a similar measurement, rose 1.14 to 1,136.77.

In corporate trading, industrials rose and utilities were up 1/8 in light trading, according to the investment firm Salomon Bros.

Moody’s investment grade corporate bond index, which measures price movements on 80 corporate bonds with maturities of five years or longer, was up 0.40 to 275.08.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds was up 3/16 point at 87 1/8 as of 3 p.m. EDT. The average yield fell to 8.21% from 8.24% late Tuesday.

Yields on three-month Treasury bills were up 2 basis points to 6.31%. Six-month bills rose 5 basis points to 6.74% and one-year bills were 4 basis points higher at 7.04%. A basis point is one-hundredth of a percentage point.

The federal funds rate, the interest on overnight loans between banks, traded at 7.1875%, up from 7% late Tuesday.

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