Evening star., 1926-06-20
BONDS HOLD OWN
IN WEEKS TRADING
Strength in U. S. Issues Is
ImpreSSive-Better For
eign Securities Strong.
by GEORGE T. HUGHES.

bl UEOhtsE Il. Ill OHES.
NEW YORK, June 19.-Interest in
the bond market suffered from the
competition of the renewed specula'
ton in stocks this week, but prices
in the main held firm and in at least
two classes of securities went sub
stantially higher. These two were
United States Government loans and
foreign obligations.
The strength in Libertys and
United States Treasury notes was
very impressive. 1t confirmed the
predictions of those who have been
saying that yields obtainable on
United States Government bonds are
steadily tending toward lower levels.
The supply of'these premier invest
ments is diminishing as the Treasury
Department retires sizeable blocks
through the sinking fund and as the
refunding issues are progressively
smaller than those which fall due
from time to time. On the other
hand, the demand is just as vigorous
AS ever and the only possible result is
higher quotations. SO it was not sur
prsing that this week three Govern
ment bonds made new 1926 high
records.
Three at New Highs.
These three were the first Liberty
slss. the third Liberty 414s and the
Treasury ass. Buying of the Liberty
3las was based on the fact that after
July there is no longer tax exemption
on any other Liberty issue except for
5000 par value to one individual.
ITp to that date a single investor
could hold $50, 900 par value of Lib
critics without being subject to taxa
ton on the income therefrom.
Now, the significant fact in the
weeks transactions was not so much
that the taX-exempt bonds should ad-
vance on these purchases by wealthy
investors as that the other Libertys
should show no effect of the cor
responding selling. The rise in the
Treasury 33 9 is eNplainable on the
theory that if the whole Government
bond list is to do better, the lower
coupon rate issues should show the
largest appreciation. AS to the source
OF the buying. corporations and tinan-
cial institutions were doubtless the
largest purchasers, but dealers re-
ported good inquiry from individuals
as well. in all parts of the country.
Notwithstanding this market prefer
ence for Government securities in
evidence all the week, there was no
corresponding improvement in the
high grade first mortgage rails. Quite
the contrary, up to the last two days
of the week this section of the list
showed signs of wavering. For one
reason or another the savings banks
which are the chief buyers of this
grade of bonds, were holding off, and
Yields of from $50 to AIS per cent
held no inducement for other in
vestors. For the time being. here at
least. the easy money situation had
seemingly been fully discounted.
Better Foreign Issues.
The real feature of the market
aside from United States Government
loans was the better grades of foreign
issues. In this group, too. il was
foreign bonds which had been com
pararively neglected most of the year
so far. namely, the japanese and the
Australian descriptions
There was no change in the invest.
ment status of the obligations Of
either of these countries. 1t was sim
ply that in the search for an attrac-
tive return these bonds were picked
out on the belief that they were sell
ing out of line. This process has been
long while. 1t was now transferred
to foreign bonds. AS a matter of fact.
the credit of Japan has long deserved
better price for its dollar bonds, and
the same is true of Australia
About the more speculative foreign
Issues there is little to be said except
that they manifested surprisingly
small concern about events abroad.
The reaction To political developments
on the other side was confined. for the
most part, to the exchanges It is
true that the dollar bonds Of France.
Belgium and Italy. especially those of
Italy, sold around their recent low
points. but not in sufficient volume to
register alarm. German obligations,
municipal and Industrial, moved inde-
pendently of other European issues. at
times displaying striking strength.
Domestic Issues.
The general run of the domestic list
was not Importantly changed. With
quotations on the average higher
than at any time for decade. fur
ther advance must necessarily be slow.
More significant was the prompt sale
Of new issues. The aggregate of the
weeks offerings, nearly $175. 600 900.
was exceeded by only one other week
IN 1926 to date, and that was in Feb.
fuary. Part of this sum was made
up of $60,000.000 Federal Land Bank
bonds, which went to those looking for
TAX exemption and willing to take
something else than Liberty 3& or a
high-grade municipal. Sale Of so large
an amount on the low-yield basis of
less than 4.25 per cent is in itself
worthy of note. New public utility is
sues were also quickly disposed of.
The money outlook remains reass,lr-
ing. Probably there will be some
hardening of rates as July l ap-
proaches on the midyear requirements.
but most authorities do not expect any
rise in interest charges sufficiently un-
favorable to affect the bond market,
Probably also there has been some
speculative buying of investment Sc
curities by dealers and traders who
will want to liquidate. which NAV de.
press quotations somewhat, but this
also doubtless will be temporary. The
prospect at this time is bright for
maintaining bond prices at least
fhpiis