Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-04-13
DEMAND FOR BONDS
LAGS DURING WEEK
Prime Investment List Suf-
fers in Competition With
Common Stocks.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, April 12-It is becom-
| ing more and more evident that the
| major factor affecting bond prices over
the longer term is not money rates, i'm
portant as they are, nor even the trend
of commodities, influential as that is,
but the competition with the stock
market.
For a time early in the year bonds
we're in active demand at rising prices,
a demand that came largely from deal
ers, but one which advanced quotations
| just the same, and it looked as though
the investment market was in for a pc
Rod of pronounced strength.
This week, however, and to a less de-
gree in the preceding week, the bond
market has been heavy, and while the
averages still are far above the 1880
low they are down substantially from
the high. Moreover, there is no individ-
ual investor interest in the bond mar
ket. Whatever buying there Is comes
| from institutions. The reason, OF course,
is the heightened interest in the stock
market, the growth of speculation in
! equities and the establishment in
popular favor of the theory that di-
versif1ed list of stocks not only assures
reasonably safety. but good opportu-
nifty for capital appreciation.
Low Yields.
How long this condition will conAlue
it is impossible to say just now. The
| stock market may have a substantial
reaction and the new crop of specu-
lators may he hurt, just as happened
| last Fall, and then there may be re-
turn to bonds. But of all this there is
no sign so far. 1t had been thought
that the lesson of last october and No
vember had been so thoroughly learned
| that there would be no need of repeat
ing it; but the fact is that today just
as in 1929, there are plenty of industrial
and public utility common stocks on
which the yield at present prices and
present dividend rates is less than that
| to be had on high-grade bonds.
AS far as money goes, there has been
no important change during the week.
Call money has ranged between ~ and
per cent, and time money is about
where it was a week ago. There Is no
obstacle in credit conditions to fur
| Their advance in fixed Understanding
securities, particularly those Of medium
grade. The speculative fraternity has
| shown no concern over the increase In
brokers' loans, nor IS there any reason
to believe that the bankers feel any
|
| the Federal Reserve has not taken any
steps to restrict the supply of credit.
The decline in commodity prices has
been checked temporarily, but there
| has been no significant rally yet In
| Dun's list of wholesale quotations of the
So changes on the week, Is were on the
side of advance.
Meanwhile there has been an in
crease of new offerings which, of course,
has not been helpful to the market for
seasoned issues. The total of new bond
issues this week was 1882, Ill 900, COM
pared with $85, 100000 a week ago and
$50, 486 600 in the same week of 1929. OF
| this weeks flotationS one of the two
| largest was a Short-term issue, the six
month 5 per cent treasury notes OF
the government of the Argentine ma
ton to total of $50,000.000. Priced
to yield per cent, and attractive only
to banks and financial institutions, this
offering is of interest because it Is the
largest single piece of short-term
financing for a South American gov
eminent in seven years.
| South American Bonds.
South American obligations suffered
severely in the market break six months
ago and have not been popular since.
Probably the turn has now come. for
1
placed, but it was announced that
| negotiations have been entered into be-
tween the state of Sac Paulo (BraziD
| and London and New York bankers for
a large coffee loan, part of which IS
to be placed in the United States. In
cidentally, the state of Sac Paulo Is
said to have decided to reverse its
| policy of accommodating coffee in an
effort to maintain the price, an ex-
pertinent which resulted disastrously,
| lust as did that of Cuba, with sugar
and that of Great Britain with rubber.
The other important new issues of
the week was the $50,000,000 of Erie
Railroad refunding and improvement SIS
offered at a price to yield the buyer
5.25 per cent. This was about in line
| with the market for railroad obligations
of that grade. Bonds in this group
have not been affected by the falling
off in car loadingS or the decrease in
gross and net income the railroads have
been reporting as compared with re-
suits of a year ago. The margin of
safety is still large and the general eX-
| pectation is that rail traffic will pick
up In the second half of the year.
Meanwhile bonds Of this type offer ex-
ceptional investment opportunities.
Copyright. 1907
|