Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-05-11
INVESTMENT BOND
PRICES ARE WEAK
Market Gives Disappointing
Exhibition in Face of Cheap
er Money Rates.
Special pIspatch to rhe star.

Special Dispatch to The Star.
NEW YORK, May 10.-The invest
ment market put on a disappointing
performance during the past week.
With every factor in its favor. it did
not respond, except momentarily, to
the dropping of money rates to the
lowest level in years. In seeking an ex-
PLANTATION, bond men are apt to blame
the bad break in stocks, but since a
few weeks ago they were saying that
bonds would not improve until there
had been a drop in stock prices, this
argument is rather weak.
It is true, of course, that the break
in equity prices has caused heavy draw
ing against savings banks, and so these
institutions are not buying bonds just
now. But life insurance companies are
still fair buyers of bonds, even though
the high yields of real estate mort
cages have diverted considerable sums
in that direction that might otherwise
have come into the investment mart.
Public and Market.
Wall Street is beginning to suspect
that the basic cause of the bond mar
ket's continued illness is that all the
talk Of the public not being in the
stock market Is hot air. The. latest
theory is that the public is very much
in the stock market, so much so, in
fact, that 1t has no money for fixed
income investments.
However. before the bond market
slumped again there were a couple of
losses previously made from last
MARGINS high levels were retraced.
These were later Cancelled to a large
extent, so far as domestic bonds are
concerned, but foreign credits have
held up very WELL For instance, %
representative foreign loans stand to-
day at the average price of 1914,
against their 1880 high level of 100.13
and their 1929 low of 1891.
During the week there was a total of
$125, 100000 of new issues, compared
with SITS 900 900 the week before. The
bulk Of 1t was made up Of medium
tractive terms. The result OF such
marketing, of course, Is to bring down
outstanding bonds. This has been one
reason for the failure Of the market
to gain.
The strength in foreign Rotations is
a reflection OF several factors. In the
case of the French issues, it is the
result of that governments policy of
buying In its own obligations. This was
determined in the repurchase Of the
SIS, 000, 900 loan made by the Swedish
Match Co. to the French government
in 1927 at 10313, against the issue price
Of 93h. This policy of the French
has an indirect effect on other foreign
dollar bonds, in that many of them are
being purchased by investors whose
funds have been released by purchase of
their French holdings.
South American Group.
Turning to the South American group.
the high prices here are the result of
active market preparation for new
bonds. It Is estimated that over $780,
100000 in Latin-American loans are
under negotiation or in preparation for
this market. However, very small
portion of this is all that can be ex-
ization loans for Central European
countries are also being considered.
Then there Is the now Ubiquitous
subject OF the new PREPARATIONS bonds. It
appears that New York may get a slice
OF something over $100.000,000 of these
No great difficulty is anticipated in
marketing them, provided price and
yield are right, but there is some TN
easiness In the international market
over Tie pIOpOSdl 10 make THEM ulCer-
changeable on any American or Euro
pean exchange. This would eventually
provide for the present $500, 1000, 900
loan which is only the first installment
of the huge total-an arbitrage security
of such vast proportions that its sudden
movement to one exchange might
swamp that particular market.
Municipals continue to be in good
demand, with not enough new offerings
coming into the market to break the
high level that has been pretty we'll
maintained since March During the
week there was spirited bidding for
$40, 000,00 Westminster County, N. Y,
park and improvement bonds. The price
at which the issue was bought indi-
Gated that the range Of $50 TO 4.4o per
cent yield still holds good as the market
average.
Bond dealers are still hopeful of a
more healthy revival of bond trading,
and the drop of 5000, 100000 IL brokers
loans on Thursday was hailed as
sign. albeit an uncertain one. that some |
FUNDS will shortly be available. tor cx-
tensive bond purchases.
Copyright. 1s3ol