Yields

Harney farmer Ronnie Sewell is reluctant to criticize this summer's weather."We could've used a few more hot days," he said. "I hate to say that after what we went through in '91."Last year, county farmers experienced the worst drought in memory. Rainfall in the Westminster area was about 10 inches below normal.County farmers lost 70 percent of their corn crops, 80 percent of their pasture lands and 62 percent of their soybeans.This year is a different story.Rainfall as of Sept. 11 in the Westminster area was about 3 inches below the normal level of 25 inches, said Carroll D. Homann of the Maryland Agricultural Statistics Service.

IN AN UNUSUAL phenomenon, the total return on fixed-income mutual funds is stomping the average yield on the bonds those funds own. If you invest in an intermediate Treasury note today, your yield will be significantly less than 4 percent. Yet the total return on the average intermediate Treasury mutual fund over the past year is 12 percent. Pick virtually any category of bond and the story is the same: big gains for bond funds despite small yields on the bonds they own. The discrepancy is so big that it can't possibly continue for long.

NEW YORK -- U.S. stocks, led by technology companies and the first decline in bond yields in more than a week, climbed yesterday amid expectations that Republican gains in mid-term elections will lead to a more pro-business Congress.Telephone, computer hardware and software and electrical equipment stocks surged as yields on benchmark 30-year Treasury bonds fell to 8.12 percent yesterday from 8.16 percent Monday, when yields reached their highest point since August 1991.For now, investors' optimism about the election outweighed concern about rising interest rates.

PARIS--Yielding to increasing pressure from other OPEC members, Saudi Arabia said yesterday that it would cut oil production by about 100,000 barrels a day.The reduction by Saudi Arabia, the world's largest exporter of crude, amounts to a modest 1.2 percent of its daily output, but some analysts said that in coming months, in cooperation with opther members of the Organization of Petroleum Exporting Countries, the Saudis could make further cuts.In the last two week, Venezuela, Nigeria, Algeria and Libya have each announced reductions ranging from 20,000 to 50,000 barrels a day. Iran is widely expected to cut its output of more than 3 million barrels a day by at least 100,000 barrels, and Indonesia will also announce cuts of about 50,000 barrels a day, said OPEC officials who spoke on the condition of anonymity.

NEW YORK -- U.S. stocks tumbled in the final hour of trading yesterday, buffeted by computer-guided sell orders and surging government bond yields.The decline erased big gains in over-the-counter stocks and sparked a retreat in blue-chip issues.The Dow Jones industrial average closed 36.20 points lower, at 3,268.96. The index fell as low as 3,260.86, after rising as high as 3,313 at midday. Standard & Poor's 500 index plunged 3.79, to 430.73.The high-flying NASDAQ Combined Composite slid 3.64, to 678.21.

NEW YORK - U.S. Treasuries soared yesterday, pushing two-year note yields to their lowest level since Dwight D. Eisenhower was president, as investors sought the safest securities after the worst terrorist attack in history. Two-year notes soared three-fourths of a percentage point, or $7.50 per $1,000 face amount, to $101.2188, driving yields down 40 basis points to 2.98 percent. That is the lowest since 1958, when Treasury securities maturing in two years yielded 2.37 percent, according to A History of Interest Rates, by Sidney Homer.

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.

NEW YORK -- U.S. government bonds rallied yesterday in hectic trading after a government report showed inflation remains subdued.The benchmark 30-year bond's yield fluctuated between 7.46 percent and 7.60 percent before closing at 7.49 percent, down from 7.56 percent at Thursday's close. On Wednesday, the yield reached 7.66 percent, the highest since Nov. 11, 1992."We have no inflation," said Jane Wyatt, chief investment officer at Voyageur Asset Management, a Minneapolis-based firm with $6.2 billion in assets.

With money-market-fund yields falling every week since December in reflection of the Federal Reserve's easier money policy, you may wonder whether the shrinkage of your dividend income could be abated if you switched to a bond fund that offers a higher yield.Such a move could turn out to be the right thing to do. Before you make it, however, you need to bear in mind the risks involved.Bond funds expose you primarily to two major risks: credit risk, the probability that issuers of bonds owned by the funds won't be able to pay interest or repay principal; and market risk, the probability that bond prices will fall when interest rates rise.