CREDIT : Bond Prices Steady Amid Mixed Economic Signals

NEW YORK — Conflicting economic signals kept most bond prices unchanged to slightly lower Wednesday in dull trading.

The Treasury’s closely watched 30-year bond declined point, or $2.50 for every $1,000 in face amount. Its yield--often an indicator of interest rate trends--edged up to 9.22% from 9.20% late Tuesday.

As rain continued to fall in the drought-parched Farm Belt, the ongoing slide in farm commodity prices supported bond values by diminishing anxiety about inflation. Soybean futures prices closed sharply lower for the third consecutive day on the Chicago Board of Trade, while oats and wheat also declined.

But oil prices rebounded, amid upbeat reports about the proposed cease-fire in the Persian Gulf and the possibility for a meeting of key members of the Organization of Petroleum Exporting Countries.

In addition, analysts said, many bond investors are still concerned that recent signs of strength in the economy could prompt the Federal Reserve to tighten credit and force interest rates higher.

“What you have are conflicting forces,” said John Sebastian, executive vice president of Clayton Brown & Associates, an investment firm in Chicago. “Right now, it’s sort of a standoff.”

Market participants are looking toward Friday’s government report on the consumer price index for June for a clear indication of inflation.

“The market is lacking a strong sense of direction,” said Maria Ramirez, a managing director of Drexel Burnham Lambert Inc.

In the secondary market for Treasury bonds, prices of short-term government issues finished unchanged to 1/32 point lower, intermediate maturities were flat to 1/32 point higher and 20-year issues were unchanged, according to Telerate Inc., a business information service.

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

The Shearson Lehman daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, was down 0.50 at 1,136.99.

In corporate trading, industrial and utility bonds were unchanged in light trading, according to 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, slipped 0.10 to 281.78.

Three-month Treasury bills, meanwhile, rose 3 basis points to a discounted rate of 6.70% and a yield of 6.90%. Six-month bills slipped 1 basis point to a discounted rate of 7.04% and a yield of 7.39%, while one-year bills were unchanged at 7.21% to yield 7.71%.

A basis point is one-hundredth of a percentage point. The yield is the annualized return on an investment in a Treasury bill. The discounted rate is the interest rate the market uses to price bills.

The federal funds rate, the interest on overnight loans between banks, was quoted late in the day at 7.688%, unchanged from Tuesday.

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