Evening star., 1927-06-19
BETTER DEMAND
MARKS BOND TRADE
Prices Still Far Below High
Set in Mid-May-Money
Still Abundant.
BY GEORGE t. HUGHES.

Special Dispatch to The Star.
NEW YORK, June 1S.--The week
just closed has witnessed a series of
confusing price movements in the Sc
curity markets. Stocks had severe
setback on Tuesday, which was the
first business day of the week, but
they recovered in the same impress
sive fashion that they have exhibited
after practically every break to date.
Some speculative leaders set UP new
high records in the later trading.
The bond market was slightly firmer
at the end of the week, that is, for
seasoned issues. Prices are still Tar
below the high of the year reached
in mad May, but there is little better
demand, on the other hand, the con-
gestion OF the market for new offer
ings is just as great as ever. Until
real progress is made in clearing
dealers shelves of unsold new bonds
a resumption of the main advance
can hardly be hoped for.
Commodity Prices Mixed.
The commodity price situation is
much mixed On the week there have
been more declines than advances, but
not many more. The most satisfactory
conditions obtain in the market for
the metals. There is no Improvement
in the oil outlook and there has been
excessive weakness in rubber futures.
Corn is higher. but other foodstuffs
are not much changed. The remark
able thing is that nowhere in the COM
modify field is there any sign of the
imitation that might be expected from
the rise in securities,
Money is lust as abundant as ever.
Call loans ruled on Friday al per
cent, which was the lowest since May
%. Time money was little nrmef
but not enough to indicate trend.
The Federal Reserve weekly state
uent revealed an increase in gold re-
serves which would have been much
greater if it had included the item
of 'tgold abroad" If. as is commonly
asserted, the strength in the security
markets is founded upon easy money,
there is no turn in sight.
Speculation has concerned itself in
great measure with the railroad
stocks. What seemed to be confident
buying has advanced quotations for
the shares of carriers associated IN
the various merger plans, in one case
at least to the highest for all time.
Buyers have been taking for granted
approval of the Federal regulatory
authority. 1ucy may PO StA1J~NS~N -
another disappointment.
Decision on c. & O.
More light will be thrown upon the
attitude of the Interstate Commerce
Commission when the decision of the
aupIicatien of the Chesapeake & Ohio
TO acquire control of the Erie and the |
Pere Marquette is announced. Specu-
lative opinion is that Endorsement OF
the latest Van Sweringen plan viii be
followed by a spirited advance in the
general market for railroad stocks,
while a veto would have the opposite
effect. However that may be. the
market this week acted as though
favorable action were assured.
In some respects, however, the !
market has not come up to expecta |
tions. The New York Central raised |
It's dividend rate but there was no /
rush to buy the stock. The belief is |
that the Central intends TO offer share
holders additional stock. following |
the example Of the Baltimore & Ohio.
Perhaps the market reaction to the |
Baltimore & Ohio offer deferred spec |
ulation for the rise In New York |
Central.
United States Steel has been neglect
ed ever since the new stock has been |
dealt in on a cash basis. There are /
many other instances of investment |
sticks which have not participated in |
the general advance. Two Of them |
are Pennsylvania and Union Pacific. |
Analysis along this line casts some |
doubt upon the frequent assertion that !
the strength in stocks represents an |
overflow from the bond market.
Reinvestment i'm July.
The actual test will come when the |
July dividend and interest payments |
are available for reinvestment. Esti- |
mates are that the total this year of |
above $3.50, 600 900 win set up new
high record. This money will have to
60 back into securities Of one kind or
another. If bonds are the favored
class the present oversupply will be
relieved; If the sum goes in any large
proportion into stocks it will stimulate
that market Of course, both dealers
have been attempting to anticipate
this reinvestment demand, with what
success remains to be seen.
The problem cannot be solved until
Il is. known wheather actual buyers
Of securities, investors not spectators.
can be forced to pay prevailing prices
and to accept prevailing returns. The
small holders of the second Liberty
loan, at any rate, are displaying re-
luctance to accept the Treasury Of
feFing of an exchange. High-grade
savings bank bonds are no longer in
demand by individual buyers because
the yield is not attractive. 1T is per.