Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-02-09
SECURITIES
MARKET IMPROVES
Easing of Money Rates and
Drop in New Financing
Aid Prices.
Special Dispatch to The Star.

NEW YORK, February g. The
dominant factor in the investment mar
ket during the past week was money.
At the beginning of the week, money
had a firm tendency, chiefly due to
month-end requirements, but Tuesday
and Wednesday saw an easing, while
on Thursday, the action of the Bank
of England and the Federal Reserve in
cutting their rates down by half of
per cent established condition which
enabled bonds. especially high-grade is
sues, to make definite Roadway. The
Federal Reserve Banks in Cleveland and
Chicago followed New York's example
in cutting their rates on Friday.
1t was the first general recovery since
early in December, as one thing after
another has arisen to keep prices down.
In December it was tax selling. In
January it was a flood of new issues
brought out at cut prices. This weeks
reduction of rates comedies with
much diminished volume of new financ-
ing, and, of course. some of those who
sold out their holdings IN December to
show losses on their income tax returns
are now buying their lines back again.
This has also helped the market.
Decline in Commodities.
Then there is the influence of the
continued decline in commodity prices.
After a mild midweek display of
strength, these markets saw a decline
on Thursday to new low levels for the
season. AS long as this tendency con-
tinues, bonds may be expected to gain
in price and, consequently, decrease IN
yield This trend Is illustrated by an
analysis of yields.
New corporate securities showed a
decrease of 54 per cent in yield dur
ing January, the average standing to-
day about SOS per cent. against $50
in December Many of the new offer
ings were high-grade bonds. The aver
age of industrial bond yields today is
about COL, real estate GIG. public utility
5.22 and railroad 4.79. Foreign bonds
average around SIT yield as compared
to GIL in December.
New fiotations during the week
totaled about $68,000,00O. There was
So OOO, 900 of municipal bonds. OF the
balance the most interesting issue was
that of $4,000, 900 SiemenS and Halske
participating debentures. While the
face amount of the debentureS Is $500,
the price at which they were offered
was 1898. The debentures are to carry
6 per cent coupon, but the company
agrees to pay, in addition, the excess
over 6 per cent of the dividend rate on
the company's common stock. Since
the present dividend is IA per cent this
gives the S400 face value bond market
value of we'll over 5000, the level being
established in trading during the week
as between $685. and 1910. Hence the
issue, while calling for $14.000,000 will
actually yield something like $50, $780,
600. There was also $20,000.000 Louis
vile and Nashville bonds offered by j.
p Morgan g. Co. at 94h. The issue Is
made up Of $15,000,00 of 41as to yield
4S75 per cent and 100000 Of As to
yield 1876 per cent.
Domestic Bonds.
While domestic bonds have shown
increased activity, and United states
Government issues closed the week at
their best levels of the year. it was in
the foreign department that the most
consistent strength was shown, taking
the week as a whole. AS was the case
last week, French descriptions led in
activity and appreciation the Z per
cents and TBS both going to the high
est prices since issue. The tbs are
not callable and even at their high of
1913 OFFER an attractive field. while the
rs are callable at par at the rate of
81 200 900 per annum. These are drawn
by lot and the investor. If his bond were
drawn during the first few years he
holds it, would find his maturity yield
considerably reduced. However, this
bond touched 116.
Weakness continued in Australian
bonds. which have been depressed for
some time due to over-financing by the
federal and provincial governments in
this market at a time when Australia
is going through a business depression
incidental to the decline in wool prices
and the extravaganza of labor govern
ments. With the exception of the
Queensland issues. Australian obliga-
tons stand about 10 points below their
original offering price. There are about
$3.50, 600, 900 of those fioated in New
York still outstanding. Reassuring
statements by the Australian prime
minister and treasurer on Friday abated
some OF the concern about these issues
and they retraced part of the lost
ground. In addition Australia shipped
| 1000, 900 pounds of gold to London to
build UP a reserve to take care of over
/ seas commitments.
Peruvian issues were active and a
| little higher in response to announce
ment that Peru will shortly pay $4,000
900 of a 100000 short term credit
arranged here last year. Cuban bonds
| were strong with announcement OF the
arrangement Of an $80,O00,000 credit,
part of which will be used to retire
$40, 100000 of outstanding public works