Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-05-18
BONDS MARK Time !.
IN WEEKS TRADING
Cheap Money Has Thus Far
Failed to Stimulate In
terest in Market.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, May 17.-Bonds con-
tinue to mark time. Prices today are
not much different from those Of q
week ago. There have been moderate
rallies in both high-grade and second
airy domestic issues, followed by an alb
sence Of demand and reaction back
to the former level.
The averages stand approximately
where they were in late April, before
the rediscount rates were reduced and
all forms of money accommodations
dropped to the lowest level In years.
Dealers in investment securities con-
tinue to have faith In the ultimate re-
Spouse by bonds to cheap money. There
Is everything In favor of their theory
working out, but 1t may take time.
Meanwhile, conditions discourage those
who are carrying unsold issues. Obvi-
ously, the steady inflow of new issues
into market that had not been cleared
up Of the March and April offerings
when rediscount rates were reduced has
depressing effect and holds back issues
that normally would react more prompt
ly to better bond market surroundings.
Reparatlons Loans.
The theory that the reparations loans
were causing the stagnation does not
hold good, in view Of the amount of
domestic corporations and domestic
municipal issues, and also the consider
able sum OF short and long term for
eign bonds that have come into sight
since the German loan was first con-
Sidered. The effort to hold back new
financing in order to make q place for
the reparationS loans either has not
been successful or never had been in
tended.
For some weeks the total Of new
bonds, notes and stocks has been run
ming at an average Of $125, 000, 900. 1t
includes loans Of large individual size,
totals than the number of moderate
sized issues. Some Of these loans have
gone well. This Is true of the $50,000,-
600 American portion Of the Japanese
government 5ks, which was brought
out on Monday at 90 and has since sold
at good premium. In contrast Is the
Brazilian coffee loan. which Is at dis
count Of IA per cent in London.
Distributors Of bonds find that they
can sell almost any short-term issue at
yields approximating per cent for
the longer dated bonds hang fire. The
change in the bond market will come
when corporations and institutions be-
gin to show as much Of q desire to
take up the long maturities as they
have displayed toward the shorter ones.
The question Of price naturally enters
sues. They are somewhat affected by
sues. They are somewhat acected bp
the desire to shift from bonds that they
have been holding and which may not
be Of quite as good quality or privilege
oc az nfhArQ
Recently the proportion of second
grade offerings to those of high rating
has been rather large. It Is in the
former that most of the market con-
gestion exists. The experience of pur-
chasers of this type Of issue has not
been altogether satisfactory in the last
few months, as with the closing out
Of syndicates and the establishment OF
q free market prices have reacted to
the extent Of taking away nearly all
Of the dealers profit In the business.
This comes from bringing out bonds
at too high prices, compared with what
can be purchased of the same type In
the market. It Is another situation
that will have to be improved before
the investment List shows great deal
Of vigor.
Municipal Borrowing.
Municipalities are able now to Dor
row on better basis than for many
months, which Is an aid to development
of general business throughout the
country.
The Treasury Department is looking
forward to refunding Of the 4B per
cent certificate due June Is. There are
now quoted on less than q per cent
basis, with less than q month to run,
whereas the Government just year
ago was paying the highest price for
money and giving an additional in
centive to purchasers in the form OF
income tax immunity. It should be
able in June to redeem its high-coupon
notes in the most favorable basis Tor
any similar situation. The Treasury
bills sold this week on q 2.54 bank
discount basis, which Is q new low
record Of interest for paper Of this kind.
.., (Copyrisht, lsSo) .,.t,.,.