Bond Rally Continues in Light Trading As Sentiment Persists That Fed Is Easing
NEW YORK -- The bond market's lengthy rally continued yesterday as many short-term interest rates declined again.</br></br>Continued speculation that the Federal Reserve is easing credit and predictions by Reagan administration officials that the U.S. trade deficit will decline this year helped bolster bond prices, several traders said. Some actively traded issues rose by half a point, or $5 for each $1,000 face amount.</br></br>"The market smells Fed ease," said David C. Matthews, a vice president at Harris Trust & Savings Bank in Chicago.</br></br>The Federal Reserve's policy committee met yesterday and Tuesday to outline strategy. A Fed spokesman declined to comment, as usual. Fed Chairman Alan Greenspan is scheduled to give his mid-year economic report at a House Banking Committee hearing on Feb. 23.</br></br>Trading volume was lethargic yesterday. Many investment managers are apprehensive about a government report to be released tomorrow morning showing the nation's merchandise trade deficit for December. Some also are nervous about a Commerce Department report to be released this morning on retail sales for January.