Weak Dollar and Jitters Over Economic Reports Join Forces to Deal Setback to Most Bond Prices
NEW YORK -- A weaker dollar and worries about several economic reports to be released today depressed Treasury, municipal and mortgage-backed bonds.</br></br>Fears of higher interest rates abroad contributed to the setback. Actively traded Treasury issues fell about half a point, or $5 for each $1,000 face amount. Much larger declines -- although for different reasons -- were posted by corporate junk bonds, which recently have fallen into a deep slump.</br></br>Junk bonds, those issued by companies with low credit ratings or no ratings at all, tumbled yesterday by as much as two points. One major reason: worries that slower economic growth will mean trouble for many companies burdened by heavy debts. Traders also worry that an avalanche of new junk-bond issues over the next few months could weigh heavily on the market.</br></br>Nervousness about today's economic reports has pervaded the financial markets all week. Bond traders are especially concerned about the producer price and trade reports.</br></br>The PPI report is commanding special attention partly because the two previous reports showed much larger increases than most analysts had expected. Those reports showed a huge 1% surge in prices in both January and February, heightening inflation fears. This time around, many forecasters expect the March report to show an increase of 0.5%.