Yields on 30-year Treasury bonds drop below 6.8% for first time

March 04, 1993|By Bloomberg Business News

NEW YORK -- U.S. Treasury long-term bond yields dropped below 6.80 percent for the first time ever amid news of a slumping economy and a rush of investor demand.

The benchmark 30-year bond traded to yield as little as 6.77 percent, before closing at 6.78 percent. The previous record was 6.815 percent, set the previous Wednesday. The Treasury began selling bonds regularly in 1977.

A host of events fueled yesterday's rally, including a municipality buying a large block of Treasuries for a so-called "defeasance" transaction,said Steven Wood, director of financial market research at Bank of America. Municipalities typically fill escrow accounts with Treasury securities, with which they redeem debt at a later date.

"When there's one big buyer, it continues to excite everybody in the market," Mr. Wood said. Bank of America's customers are now buying longer-term debt to take advantage of the higher yields and the bigger price gains. "They're more fully invested than they were a week or a month ago," he said.

The 30-year bond surged 3/4 , or $7.50 per $1,000, to close at 104 13/32.

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