Rush to Buy Bonds Sends Rates Down; Clinton Plan, Fall in Consumer Confidence Also Hurt Stocks, Dollar
Panic buying hit the bond market yesterday as investors, apparently convinced that interest rates are down to stay, scrambled to purchase bonds before yields fell any further.</br></br>In the process, rates on intermediate- and long-term U.S. Treasury securities were driven down one-tenth to two-tenths of a percentage point in a single day.</br></br>"It is just breathtaking," said Mickey Levy, chief economist at CRT Government Securities Ltd. in New York. "The whole fixed-income market has appreciated dramatically."</br></br>Levy said most financial market participants seem convinced that inflation will stay low and, perversely, that President Clinton's deficit reduction proposals will dampen rather than spur economic growth.</br></br>"Actually, the package does nothing to harm the economy in the short run," Levy said. "It is clear sailing for economic growth."