CREDIT : Rumors on Purchasers’ Report Boosts Bond Prices

NEW YORK —  Bond prices rallied Thursday, strengthened by evidence of less inflation pressure and unconfirmed rumors that an influential monthly report to be released next week would show the economy is slowing down.

The Treasury’s key 30-year issue advanced about 1/2 point, or $5 for every $1,000 in face amount. Its yield fell to 9.06% from 9.11% late Wednesday.

Credit market analysts said lower energy and gold prices provided further insight to bondholders that their chronic fear of inflation is excessive. Inflation erodes the value of fixed-income investments such as bonds.

Others said the bond market was swept by rumors that the National Assn. of Purchasing Management, which issues a monthly appraisal of the economy that often influences the markets, would provide indications in its impending report of economic softness.

The bond market historically has rallied on news of declining economic growth because it eases pressure on the Federal Reserve to keep credit conditions tight.

Cherie Wallig, a spokeswoman for the National Assn. of Purchasing Management at its headquarters in Tempe, Ariz., declined to comment on the rumors, in accordance with its policy of keeping the report confidential until officially released.

The report normally is distributed to the press on the last Friday of each month after the financial markets close and is embargoed for release until the following Monday.

Credit analysts said the Commerce Department’s release today of its index of leading indicators probably would have little effect on the bond market. Most predictions show that the market expects a slight increase in the index.

“That would be consistent with any interpretation you wanted to apply,” said William Veronda, a fixed-income portfolio strategist at Financial Programs Inc., a Denver-based investment company.

In the secondary market for Treasury bonds, prices of short-term government issues rose about 1/8 point, while intermediate and long-term maturities rose about 1/2 point, the Telerate Inc. financial information service reported.