Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-01-04
INVESTMENT BOND
MARKET IMPROVES
Many Issues Respond Quickly
to Better Demand Dur
ing Last Week.
Special Dispatch to The Star.

Special Dispatch TO The star.
NEW YORK, January BIN the past
week the bond market successfully
turned the end of 1880, was relieved OF
its Oppressive load of tax selling and,
starting the new year, was buoyant I'M
der the influence of the seasonal REIN
vestment demand.
The manner in which speculative is
sues bounced from their lows on Friday
was evidence of the presence of a short
interest, but even high-grade invest-
ments made gains running to as much
as a couple of points. There was a
good deal of purchasing by investment
houses looking for an immediate upturn.
Banks and insurance companies were
back in the market.
Money Rates Remain Low.
Money rates, beyond a slight furry
just before the year ended, remained at
their bottom. The volume of trading,
while not large, was of satisfactory pro-
portions. Standard Statistics index of
80 bonds showed gain of point.
But it was not in what the market
did that the Street manifested the most
interest. The markets prospects, ac-
cording to a majority of the annual re-
views, are good, though many writer's
sounded warning that once the pent-
up flood Of new financing is released it
may be expected to act as dampener.
Men who look upon the bond market
as sound and conservative mart in
which the dollar has chance for sur
vival, were profoundly impressed when
they examined the annual bond market
tables and found net declines of from
5 to 30 points spread all through the
list Bearing in mind that investors in
certain types of bonds had almost as
bad a beating during 1880 as they had
in stocks in 1929, the renewal of any
affection of the investment public for
bonds can hardly be expected to come
overnight.
Yields Attractive.
It is interesting to note, however, that
at existing levels bonds are more at
tractive when their yields are compared
to money rates than at any time since
1920. According to study compiled
this week, theA excess of representative
bond yields over the average cost Of
money is Ia per cent. 1t is therefore
logical to SUPPOSE that, if there is
no oversupply of neW\ tissues, If industrial
earnings do not dip TO new lows and
cause renewed bond defaults, and If
money rates remain paSically cheap,
bond prices will I'LL the gap.
AS to new financing, thsre is a great
amount IN prospect. Much of it, how
ever, Is municipal ana there Is steady
market for such bonds. Second and
third grade industrial and public
utility financing will have to await a
much more fortuitous market than the
present, unless 1t is done by way of
short term notes, attractively priced and
secured. Railroads and other corpora
tons whose bonds enjoy the favor Of the
list legal for investment by savings
banks and trust funds will have little
difficulty in putting out their offerings.
but even these will have to be priced
closer TO the market than was the case
in the early part of 1880.
Foreign List.
In the foreign department many soft
spots were seen at the end Of the week,
Bolivia defaulted the January interest
on a per cent issue. Panama became
embroiled in a revolution. England
faced a coal strike, with prospects of
the trouble spreading. The Mexican
Congress adjourned without taking
action of the debt refunding agreement.
Argentina was forced to assume
responsibility for a $16,000,000 credit
which the city of Buenos Aires could
not conveniently pay.
Copyright. 1919