CREDIT : Bonds Prices Ride Along With the Rising Dollar

NEW YORK — Bond prices rose Friday, bolstered by the dollar’s resilient rise against other major currencies.

The gains were greatest in longer-term issues. The Treasury’s closely watched 30-year bond rose about 3/8 point, or $3.75 for every $1,000 in face value. Its yield, which moves inversely to its price and is often an indicator of interest rate trends, dropped to 9.21% from 9.26% late Thursday.

Analysts said bond prices got a lift from the advancing dollar, which defied the efforts of some central banks to drive the U.S. currency lower by selling dollars in the open market. The dollar rose to 133.14 Japanese yen in late trading in New York from 132.55 yen late Thursday.

“I think you had to be impressed,” said Marilyn Cohen, president of Capital Insight, an investment firm in Beverly Hills. “This was a very good day for the bond market.”

A falling dollar, on the other hand, tends to erode the value of dollar-denominated investments such as Treasury bonds.

Bond values also drew support, analysts said, from indications by Federal Reserve Board Chairman Alan Greenspan that the central bank was not changing its credit policy.

“Reserve data show the Fed has not really tightened (credit) and that was confirmed by Greenspan,” said Sung Won Sohn, chief economist at Norwest Corp., a bank holding company in Minneapolis. The Fed chairman testified before a congressional committee Thursday.

Broad Advances

Tighter monetary policy tends to push interest rates up, driving bond prices lower.

Earlier this week, bond prices fell as interest rates rose amid speculation the Fed was tightening credit to restrain rising inflation, which devalues fixed-income securities such as bonds and notes.

In the secondary market for Treasury bonds, prices of short-term government issues gained 1/16 point to 1/8 point, intermediate maturities rose 5/32 point to 9/32 point, and 20-year issues advanced about 3/8 point, according to figures provided by Telerate Inc., a business information service.

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 Shearson Lehman daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, rose 2.08 to 1,136.72.

Moody’s investment grade corporate bond index, which measures price movements on 80 corporate bonds with maturities of five years or longer, edged up 0.34 to 282.17.

Three-month Treasury bills, meanwhile, declined 3 basis points to a discounted rate of 6.94% and a yield of 7.15%. Six-month bills slipped 1 basis point to a discounted rate of 7.12% and a yield of 7.48%, while one-year bills fell 6 basis points to 7.33% to yield 7.86%.

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 7.813%, unchanged from late Thursday.

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