Evening star., 1926-12-12
NEW HIGH LEVELS
REACHED BY BONDS
Securities Higher Now Than
/ at Any Time in 13 Years,
/ After Advance.
Ry GEORGE T. HUGHES.

III UFUnOT
Special Dispatch 10 The Star.
NEW YORK. December 1.-THE
estorv of the week in bonds is that Of
new high prices. first in one section
of the list and then in another. More
or less this has been true throughout
-s4he wear. This weeks however. has
been nota hle in that for the first time
he avera ges broke through the hlghs
of 1917. which UP to this time nave
hot been approached. and prices went
htove anything recorded before early
i9I3. .
In other words. using the yardstiClt
ANan Street employs TO measure Such
effairS. bonds are now higher than AT
ANY time in l3 years. or prior to the
World War.
q OF course, individual instances may
-be found throughout the list where
-b,iceS are below the best during THIS
neriod. hut that does not alter the
{act that the general level has ad-
vanced further than even the most
optimistic had anticipated. The ques-
tion now is. What of the future? Has
7he elimination been reached? VIII
Tho next change he a reversal of the
movement that has been in progress
with ONLY minor interruptions for so
long time?
Trend in Money Rates.
The answer depends on two fac
tors. the probable trend in money
rates and the course of commodity
s,rires If both these curves continue
downward in the coming month. IN
&e1tment bonds must keep moving up
Chviouslr. dogmatic predictions would
& foolhardy. but at least il can ne
said there IS nothing now in sight 10
tuanCe the view that higher prices
lo1c q
= for still some time t0 come.
Confirmat ton Of this opinion comes
from an important source. The sec.
~oarv of the Treasury announced
th.s week his plans for December 10
Government financing. They consist
e. in an offering of 100000 900 OF ia
tcr cent certificates of Indebtedness
maturing in nine months. Now W All
street has the creates; respect Tor MI.
MELONS judgment on the money mar
ket and it was argued that If the
Secretary had expected any upward
trend in interest rates he would have
rut out a long term bond issue now
instead of waiting until next year.
At anV rate. the buying that de-
vplone6 in Government bonds late in
the week was of the most impressive
character. 1t resulted in new high
record prices for two of the Treasury
issues. the As and the 3As and in
the equaling of the previous record
high for the Treasury ANS. The
movement of these issues is always
indicative of banking sentiment as to
the course of prices for the longer
periods because the Treasury issues
have more distant ematurities than
the Libertys. The latter, however.
Joined in the upward movement this
week and two of the Liberty loans
sold higher than ever before this
year, but not up to their record highs.
German is Feature.
Next to the demonstration in Gov
ernment bonds, the most interesting
incident was the advance in the Ger
man government IS. The search for
Yields more attractive than to be
found among seasoned domestic obli-
cations centered upon the foreign
group and particularly on the Ger
man per cent international loan, the
one originally sold In 1924 as part of
the program to put the Dawes plan
into effect. The buying of this issue
was SO animated that 1t carried the
quotation at one time 21a points
above the price at which the bonds
are callable The chances are all
against Germany attempting to retire
this loan and substitute one with a
lower coupon rate. but generally even
in this strong bond market call prices
have acted as a bar to price ap-
probation.
Other foreign bonds have enjoyed
moderate improvement but 1t has
been a characteristic of the trading
that a whole group would not be
taken up at one time, but instead
specific issues in that group be select
ed for favor. French bonds have not
reflected the undeniable betterment In
French finances in any such fashion
as has franc exchange. One French
issue did sell at new 1925 top, but
there is room for much larger
advance. Holders Of French bonds
have had SO many anxious hours dur
ing the past year or two that they
are slow about adding to their com
nitmentS and outsiders are equally
cautious about investing in French
securities. Perhaps if and when
France ratifies the debt funded agree
ment with the United States all this
will he changed. 1t may come very
suddenly or il may he matter of
gradual gaining of confidence. Bel
Cium seems to he a risk better favored
by investors just now
Convertible Bond Issues.
fNlbPFuIEt i've operations In the comes
tic bond market have centered about
convertible issues and a few Of the
Junior rails Among the former some
Of the copper bonds have been con-
SpicuOuS. one outSta ndng example
being Chile Copper 6s. where the rise
In the bonds preceded that in the
stock. contrary TO the rule in such
operations. Railroad bonds with
Yields attractive to spectators are
growing steadily fewer in number but
most of the favorites in this class have
forged ahead.
Net railway operating income Of
the class | railroads in October for
the first time was at the rate con
femplated by the transportation act,
namely. 5.45 per cent on property
Investment. There may be some re.
csssion in afIic and in gross earnings
next year. Part Of the loss if il
appears may he made up by reduc-
tion in eXpenres. but II is not likely
that II can all he absorbed this way.
AM substantial drop in net income
viii test the market for these junior
ilgn1H ht,IS