Evening star., 1932-10-02
BOND PRICES MOVE
IN marrow RANGE
DURING PAST WEEK
High.Grade Domestic Issues
Firm-Foreign Group
Shows Gains.
Special Dispatch to The Star.

| Special Dispatch to The Star.
NEW YORK, October 1.-The bond
| market-save that section usually
| referred to as high-grade- pursued an
indeterminate trend this week. Much
of the time junior domestic bonds
paralleled closely minor fluctuations OF
stocks. If there were any movements
of significance, apart from the strength
Of high-grade issues, they were in the
foreign department.
The continued advance Of seasoned
corporation bonds of the safest char
acter has always been and still is re-
garded as an encouraging sign. 1t
usually preludes the advance Of second
and third grade bonds and is one of
the first heralds of a recovery in
business That is the manner in which
it is interpreted today.
Measured in points the extension of
the upturn in prime issues is not i'm
pressive Since these descriptions
reached investment levels, their average
improvement has been around ! to ! Il
points During the past week it is
doubtful if the gains in prime issues
averaged more than u point. But the
fact remains that high-grade corpora
ton bonds-for instance, American
Telephone 5s, Atchison General 4s and
Standard Oil of New Jersey 5s-are all
around their best prices Of 1882. At
the same time municipals have ad-
vanced, where price changes have oc-
Cured, owing to the scarcity values
established some weeks ago, when the
demand for prime investments first
overwhelmed the scanty stream OF new
municipal bonds
There is an obvious Interpretation to
this. The clue lies in the recent enor-
nous oversubscriptions to Treasury
note, certificate and bill issues. When
the Treasury borrows for less than one
quarter of / per cent per annum there
is already created such a demand that
the short-term high grade market can
not satisfy it and large amounts of
money from banks, investing institu-
tions and individuals turn to long-term
providing public confidence is
such that those investments are deemed
safe. When the supply Of long-term
Treasury and Liberty bonds is exhaust
ed, these funds go into the better grade
corporation bonds, then to second-grade
issues, and so on down the line. But
the process is apt to be halted and the
emphasis again placed on the highest
grade issues if public confidence is not
great enough to extend to the second
grade groups.
That Is the situation just now. The
market has already anticipated an i'm
provement in business and, to some eX-
tent. this anticipation has been justi-
fed. But the market is marking time
until further evidence is forthcoming.
The interdependence of the worlds
financial markets was shown by the un-
expected effect on the Australian mar
ket of the success Of the Canadian gov
ernment issue. Australia plans large
conversion operation in London next
month. Tentatively the coupon had
been fixed at Az per cent, but now the
Australian market is being dressed up
to expect a per cent coupon, in spite
of the fact that London observers do
not believe that anything less than a
Az per cent bond, offered at small
discount, will be acceptable.
German bonds were strong as the
week ended, presumably because Of buy
ing for the sinking funds The market
also reflected unofficial reports that
France and Germany would soon reach
an understanding based on 10-year
truce in the matter of ornaments and
economic boycotting. The entire fu-
ture Of European securities rests in
the fate of the Disarmament Confer
ence and the ultimate solution of the
war debts question. Until a world
economic conference can tackle the lat
ter and the former Is success, little
or no improvement can be expected.
Copyright, 1922