Bonds Get Big Push By Analysts --- Rates Are Heading Lower, They Predict, Urging Clients to Buy
NEW YORK -- Bullish bond market sentiment is on the rise again.</br></br>As the government prepares to release the next batch of economic reports, the consensus among economists and money managers is that the news will be negative. And that, they say, will be good for bonds.</br></br>"Recent data have indicated somewhat weaker economic activity," said Elliott Platt, director of economic research at Donaldson, Lufkin & Jenrette Securities. Mr. Platt is advising clients that "the near-term direction of bond prices is likely to remain upward."</br></br>Analysts insist that even without help from a shaky stock market, which provided a temporary boost for bonds during the Oct. 13 stock market plunge, bond prices will start to climb on the prospects that the Federal Reserve will allow interest rates to move lower in the coming weeks.</br></br>That would be comforting to fixed-income investors, many of whom were badly burned in the third quarter by incorrectly assuming that the Fed would ease. Investors rushed to buy bonds during the summer as prices soared on speculation that interest rates would continue to fall. But when it became clear that rates had stabilized and that the Fed's credit-easing policy was on hold, bond yields jumped and prices tumbled.