Evening star., 1932-09-11
BONDS FLUCTUATE
At RECENT LEVELS
IN WEEKS TRADING
Prime Issues Gain Slightly.
Municipal Group Attracts
Larger Following.
Special Dispatch to The Star.


NEW YORK, September 1o-The
bond market f1uctuated irregularly dur
ing the past week, at no time, however,
getting far below its high of the year
established at the elimination of the
recent recovery. High-grade bonds
showed a small net gain on the week.
Bonds, even more than stocks, have
now reached a critical period. With
an advance which has extended to 100
and 200 per cent in speculative issues,
about 35 per cent in many well sea-
soned bonds, and around 10 per cent
in the very best descriptions, the market
has discounted in advance an improve
ment in business which is yet to mate
rialize in any substantial fashion. Many
of the rises in junior bonds were predi-
Gated on business improvement to such
an extent that actual default on the
bonds and receivership for the COM
panies involved are probabilities should
the industrial upturn fail to come up
to expectations.
There has been a tendency in the
financial district to confuse the general
advance in commodity prices with a
revival of business, and there has been
much grasping at straws. For instance,
a big point was made this week of
the fact that electric power production
had fallen off only 10.4 per cent, when
declines of 13 per cent weekly had been
the rule. Actually the lessening in
the rate of decline comedies with a
seasonal increase in the use of power
and light. Then in the steel industry
one district showed operations in
creased from IL to 26 per cent, but the
increase in the operating rate for the
entire industry was only l per cent, or
less than the usual seasonal improve
ment
1t is too early, as a matter of fact,
to come to any definite conclusion as to
what business is doing or is about to
do. 1t is the progress actually accom-
plished after Labor day that will count.
Many signs point to a revival. But
until it comes, the bond markets ad-
vance stands checked.
The bond pool, which was organized
early in June and which bought high
grade bonds at about their lows, has
recently been reported taking profits
in these descriptions and buying in
blocks of junior bonds. If that is
true, then the current demand for
prime bonds must be large because
there has scarcely been a tremor in
that division of the market. On the
other hand there has been no strong
tendency to rally in junior bonds this
week, except in those of the secondary
grade. which, in reality, are well Sc
cured bonds.
Municipal bonds have attracted con-
siderable attention owing to the sharp
rise in New York City issues, follow
ing the retirement of Mayor Walker
and the vigorous economy measures in
stituted by his successor. New York
City borrowed readily during the week
at 5l4 per cent compared with per
cent a few months ago.
In the foreign division the week was
chiefly notable for the firmness of
German and other European bonds
Germany's demand for equal arma-
ments caused some anxiety over Franco
German relations, but the fact that
France and Germany reached an accord
at Stresa on the Danube problems in
dicated that a compromise could be
reached on the matter of armaments.
Copyright. 1922