Interest Rates Tumble Again As Bonds Soar --- Yield on 10-Year U.S. Note Drops Below 8%; Prices Of 30-Year Issues Jump
NEW YORK -- Interest rates tumbled again yesterday as the credit markets staged another powerful rally.</br></br>The yield on 10-year Treasury notes dropped below 8% for the first time in eight years. Bond prices soared. Prices of some 30-year Treasury issues rose about 2 points, or around $20 for each $1,000 face amount. Since Feb. 7, prices have jumped more than 13 points in one of the strongest rallies in history.</br></br>Speculation continues to mount that West Germany will cut its interest rates soon in an effort to spark faster economic growth, and that Japan and the U.S. will make similar moves in coming weeks, money managers said. Some analysts expect West Germany's central bank to act within a few days.</br></br>Further declines in oil prices also helped fuel the rally, analysts said. "There is a growing belief that the big drop in oil prices means inflation is going to be lower than anyone expected over the next several years," said William H. Gross, a managing director of Pacific Investment Management Co. in Newport Beach, Calif.</br></br>In commodity markets, Treasury-bond futures prices closed at 7 1/2-year highs. But the rally in the credit markets failed to lift stock prices. The Dow Jones Industrial Average fell 12.39 points to close at 1696.67 in active trading.