|
Rushin' for U.S. bonds
|
 |
August 27, 1998: 9:32 a.m. ET
Investors flee ruble due to political and market ills, flock to U.S. Treasurys
|
NEW YORK (CNNfn) - A growling Russian bear market took the world by storm again Wednesday, providing a key springboard for U.S. Treasurys as investors worldwide sought shelter in the American debt market.
Stock market plunges worldwide and renewed talk that the U.S. Federal Reserve may have to ease up on interest rates drove the 30-year benchmark Treasury up 18/32 in price as the yield, which moves in the opposite direction, fell to 5.38 percent.
That was a record intra-day low yield on the long bond since Treasury began issuing 30-year fixed-maturity securities in 1977.
The yield on other U.S. Treasury issues continued to plunge. The yield on the 3-year note fell below the 5 percent barrier, and the two- and five-year notes fell near that.
Official Moscow trading of dollars was halted for a second straight day Thursday. Trade at the Interbank Currency Exchange opened at 8.2 rubles per dollar while black marketeers were buying dollars for 13 rubles.
That put pressure on the German mark, which has been sweltering under the ruble woes because of German bank exposure in Russia. The mark sat at 1.8087 marks to the dollar.
But the Japanese yen, whose own woes were partly responsible for the Russian ills, was up 1.28 yen at 142.92 to the dollar.
Japan's Vice Finance Minister for International Affairs, Eisuke Sakakibara -- dubbed "Mr. Yen" -- said he was watching currency markets and advised Japanese investors to lock in profits on foreign currency transactions.
Nonetheless, Japan's Nikkei index fell to its lowest level in six years, down 452.24 points, or 3.04 percent, to 14,413.79.
Speculation swirled that the leadership of Russian President Boris Yeltsin was at risk as the nation's parliament, the Duma, voted on crisis measures.
The overnight gains in bond prices accelerated amid more anti-inflationary signs from the U.S. economy.
The nation's real gross domestic product grew at a faster-than-expected annual rate of 1.6 percent in the second quarter, but the implicit price deflator, a key element of the GDP number that focuses on inflation, rose a smaller-than-expected 0.8 percent.
Analysts say the worldwide stock plunge that has careened through Europe, Asia and Latin America could force U.S. monetary officials to lower interest rates to stem a flow of money out of overseas markets.
The tremors were set to spill over to the U.S. stock market as well Thursday, as the Dow Jones industrial average appeared set to open at least 100 points lower, based on trading in S&P Futures. 
|
|
|
|
|
 |
|
