Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-07-04
list PRICES
WELL MAINTAINED
Activity in Investment Mar
ket Falls Off as Stocks
Draw Interest.
BY GEORGE T. HUGHES.

Special Dispatch to The Star.
NEW YORK, July 3.-Activity il
the investment market during the
week just passed was limited by thu
renewed interest in stocks. Transac
lions fell off as attention was con
securities The pause, however, did
not involve any weakness.
Prices were we'll maintained al
through the list. 1t was simply thai
there was a lack of the normal Inland
out business which even in the bond
market goes up to make a large share
of the dealings.
Prices of the highest grade of in
vestment bonds are off a point or two
from the years best. Even the gen
eral average is down a shade from
the level of three weeks ago. Thu
higher yielding descriptions, bonds
which have some speculative quality
have done better and this is true In
the domestic and foreign fields alike
Buyers Shopping Around.
The fact is that bond prices now arr
so high and yields are so low com
pared with what they have been al
any time since the World War thai
buyers. institutional or individual
shop around trying to find something
selling out of line. When their idea
are not met they step aside for {
time awaiting a reaction which does
not materialize and finally they enter
the market again and prices once
more slowly rise.
This procedure has been going or
for a long time now and II has always
resulted the same way. Surplus fund!
accumulate and eventually are forced
out into the market. Undoubtedly
this is what will happen with the
enormous distribution of half-yearly
interests and dividends At any rate
bankers continue to offer new securl
ties with every confidence that they
will be quickly sold and holders o.
seasoned bonds are content to wait
until buyers are willing to meet their
views
The mid-year demands on the money
market were satisfied with a minimum
of disturbance. Even the rate for
day-tO-day loans on the stock eX-
change did not go above ) per cent.
Time money was unchanged. There
was nothing in the weekly statement
of the Federal Reserve banks to fore
cas-. any hardening of rates. The trend
at least it is not strongly upward. In
other words there is no reason to
change the opinion that as far as
money and commodity prices are CON
cerned the long-lrtnge outlook for
bonds and other fixed interest bearing
securities is favorable.
Foreign Bonds In Demand.
The three classes OF securities in
the best demand this week have been
First, the new issues: second. some of
the junior rails where a fair yield is
combined with the possibility of ap-
probation in market price, and, third,
foreign obligations. The gains in the
last-named group were the most en-
phatic.
German industrialS and municipals
were the leaders in this buying but
other foreign loans participated to a
greater or lesser degree. 1t is not so
surprising that confidence in the
ability of these German borrowers to
fulfill their engagements should be
gaining ground. Germany is in the
position of a corporation which has
been reorganiZed with probably the
worst behind. As the Wall street
phrase is, Germany has turned the
corner" For the moment doubts about
the working of the Dawes plan and
difficulties over the exchange prob
lem have been set aside. The real
point of interest is that a higher re-
turn can be had on these German
dollar bonds than the present risk
warrants.
Fully as interesting as this market
improvement in German loans is the
fact that the French and Belgian
bonds, especially the former. have
held so we'll in the face Of the slump
of the franc to a record low French
and Belgian alike. This resistance
on the part of the dollar loans of
these countries is partially eXplanable
on the ground that they have been
we'll distributed. At the same time
some concern on the part of perma-
nent holders of these securities would
have been understandable. 1t has
not appeared.
Future Hard to Read.
Conceivably. investors in French
bonds of the dollar variety are going
on the theory that even If the franc
goes the way of the mark, France
Will have to have outside help to
establish a new currency, and that
help could not be obtained if there
were any default on outstanding
French external obligations. There
is much to be said for this theory,
and it may work out that way,
though the future is difficult to read
in the extreme. The situation changes
so rapidly almost overnight. that the
French bonds dealt in on this market
were selling ut the close of this week
nearer to the high points of 1926
than to the lows.
AS far as the junior railroad issues
are concerned. buying has shifted
about from the obligations of one
road to another. It cannot be said
that this movement has run parallel
to the rise in railroad stocks on the
exchange because the interest on the
stock market has been centered about
the shares of the seasoned dividend
payers, and the bonds of these roads
are. as rule. in the savings bank
class. Opportunities for additional
advance in these Junior rails are be-
coming fewer and gains this week
have been small. Nevertheless. they
have been one Of The features Of trad.
ing. The noint about the new issues
IS the ready way in which they are
oversubscribed. sometimes exceeding
the anticipation of the bankers.