FINANCIAL MARKETS : CREDIT : Bond Prices Climb on Home Sale Report
Bond prices rose, bouncing back from a two-day tumble after the government said sales of new homes fell in January to the lowest level in nearly a year.
The Treasury’s closely watched 30-year bond rose 11/16 point, or about $7 for every $1,000 in face value after losing nearly 1 3/4 points during the past two session.
Its yield dropped to 8.54% from 8.60% late Thursday.
Bond prices moved higher after the Commerce Department reported that new home sales dropped 7.1% in January, suggesting that the economy remains weak.
“The market used that basically as an excuse to start buying (bonds),” said Kevin Flanagan, a money market economist at Dean Witter Reynolds Inc.
The federal funds rate, the interest rate banks charge each other on overnight loans, was unchanged at 8.313%.
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