The New York herald., 1922-05-08
REACTIONARY TONE
TO BOND MARKET
Bull Trend Turned Aside for
First Time This Year in
Last Week.

The bond markets reactionary tone last
week. for the first time this year that the
market has deviated from a bull trend
could be ascrlbed only to the enormous
amount OF new financing in recent
weeks. the cumulative weight OF which
has been sufficient to offset temporarily
the supplies of new capital entering the
Investment market. Realizing sales oy
traders and the competition provided ps
new flotations served to bring about
point TO two point recessions in many
seasoned bonds. Still, the market was
by no means weak. and such selling as
occurred was not due to any change In
the fundamental factors controlling lis
course Money rates. the main force
governing investment values, tended
toward lower levels, suggesting tnat
any reactions in prices at this time VIII
be but temporary resting spells in a
prolonged upward movement.
or outstanding significance as to the
long range trend of bonds TO higher
prices and TO lower yield basis Is TINS
mornings offering of s75.oco.OOo OF the
Federal Land Banks bonds at 100. They
carry only Az per cent. coupon, rs
contrasted with per cent. interest
rate on its previous issues. Another
symptom of the relocation in the money
market was somewhat firmer quota
tions for Treasury certificates. On tae
issue maturing on March 10, 1873, the
yield is only 3.45 per cent, whereas
about two months ago those certificates
were selling on a AS per cent basis.
Lower rates for bankers acceptances
also occurred, their quotation yielding
to SA per cent. bid, offered at 51s, the
loves. figures in about three years
Flurr!es in the New York Stock Ex-
changes call loan rates to per cent.
were hardly of Importance under the
circumstances.
Including to-day's $1,000, 900 Farm
Loan offering, approximately $2Oo'oVV,oto
of new bonds have been brought out IN
the last week, which means that the vol
ume of new financing is holding close
to the years maximum. The heaviest
aggregate OF corporate financing was
nv public utilities which sold ABOUT
SIS 900 900 of bonds. State and municlpai
issues approximated 100000 and IN
dustrial issues $35, 5,0Oo.O. There was very
little railroad financing. :,
Signal success continued to marx all
new underwritings. The s25 100000 of the
Pacific Telephone and Telegraph Com
pany's per cent. bonds. brought out on a
$40 basis, were oversubscrbed in a few
minutes after the formal opening or
their books and ii is understood tnat
subscriptions to them were sufnclent 10
have taken the issue four times over.
The average coupon rate OF new cor
porate issues was about per cent,
which contrasts with 7 and per cent.
coupons on the ma ajority of bonds
brought out six months ago and which
are now selling at fancy premiums.
Other interesting pieces of financing
last week included the sale of f9,O0O,OOO
OF the United States of Brazils 71s per
cent. coffee security loan at 81. to yield
ITO per cent, e OO0,0O being offered here
and the balance in London; S7,0OO,WO OF
the Northern Indiana Gas and Electric
Company's 6s at 95, to yield 6S per cent.
SIC, 900 of the Union Oil Company or
California's 6s. 1t 10i, TO yield $50 per
cent. and IS, $50 900 of the city OF Balti-
more improvement per cent. bonds,
sold on a Ais per cent basis.
The value of foreign financing in the
American market since the first of this
year is little short of remarkable. its
total being placed at s50S. 1000, or
about five times the amount of foreign
bond sales in the first four months of
last year. Not foreign issue in 1921
was sold on a basis lower than per
cent. and the average was Sh per cent.
whereas so far this year rates have Ia
pered down IL as low as 5 per cent. for
the recent ;iG0,00O.00O Canadian loan.
Those who are criticizing this country
for not utilizing it's vast gold reserves TO
assist foreign nations and stabilize in
ternational currencies may well ponder
over those figure. which, from all indi-
cations, represent only beginning.