Bonds,0520NEW YORK (AP) - Fresh evidence that the economy is slowing and inflation remains tame sent the price of the Treasury main bond to its highest level since March on Thursday.
The price of the 30-year bond was up 9-16 point, or $5.63 per $1,000 in face value, while its yield fell to 6.41 percent, an eight-month closing low, from 6.46 percent late Wednesday. Prices and yields move in opposite direction.
Early Thursday, the Labor Department said its consumer price index rose 0.3 percent in October, identical to a moderate September advance, and the Commerce Department reported retail sales rose by 0.2 percent in October, a significant slowdown from the 0.8 rise in September.
``It was all good news, from retail sales to CPI, and there were no signs of inflation. That took the market higher for the day,'' said Peter McTeague, a market strategist at MCM MoneyWatch in Boston.
Thursday's reports reinforced other recent government figures that have suggested slowing economic growth without inflationary pressures. With such evidence in hand, the Federal Reserve's policy-making committee decided Wednesday to not raise interest rates to slow the economy.
Low inflation and stable interest rates enhance the value of bonds and other assets that pay fixed interest rates over a period of time.
``The bond market is now looking at what the fourth quarter is going to look like - is there going to continued slowdown in growth and whether the next move by the Fed is going to be an easing of interest rates,'' said Kathleen Stephanson, a senior economist at Donaldson, Lufkin & Jenrette Securities Corp.
Bonds also got the benefited Thursday from a continued rise in the dollar against most other currencies. A rising dollar makes makes dollar-denominated assets more valuable for foreign investors.
Prices of short-term Treasury securities rose 3-31 point to 5-32 point and intermediate maturities rose 1/4 point to 3-8 point, reported Dow Jones Telerate Inc., a financial information service.
The Lehman Brothers Daily Treasury Bond Index, reflecting price movements on bonds with maturities of a year or longer, rose 2.39 point to 1,261.82.
Yields on three-month Treasury bills held at 5.15 percent as the discount was unchanged from late Wednesday at 5.02 percent. Six-month yields dipped to 5.24 percent as the discount fell 0.02 percentage point to 5.05 percent. One-year yields fell to 5.38 percent as the discount fell 0.02 point to 5.12 percent.
Yields are the interest bonds pay by maturity, while the discount is the interest at which they are sold.
The federal funds rate, the interest on overnight loans between banks, rose to 5.25 percent, from 5.19 percent on Wednesday.
In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds closed at 117 17/32, up from 117 5/16 late Wednesday. The average yield to maturity was 5.76 percent, down 0.01 point.
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