Word: bond
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Dates: during 1930-1939
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After one more downward swoop that carried the latest Treasury issue nearly two points below par, the Government bond market leveled off last week for the first time since the decline began early last month (TIME, March 22). Widely regarded as marking the end of the long bull market in bonds and the start of an inflationary stage in Recovery, the drop in Governments was followed by the shelving of half a dozen corporate bond offerings and a general tightening of sensitive short-term money rates. By any normal standard money was still ridiculously cheap but the up trend...
Last week Commissioner Douglas again journeyed to Manhattan to make a speech, this time to the well-heeled members of the Bond Club. Again he spoke his mind "unofficially" but with almost savage candor. Because his subject was broader, his suggestions more radical and, more important, because he is a likely candidate for the SEChairmanship after James McCauley Landis retires next summer, his Bond Club speech reverberated in every banking house in the land. For the 38-year-old onetime Yale law professor proposed nothing less than a complete remaking of the country's investment business. Said he: "Today...
...resounding statement "to correct erroneous interpretations" of his ideas on how to control inflation. It is no secret that Chairman Eccles is alarmed by the current trend of Recovery, particularly the dizzy rise in commodity prices. And after a visit to the White House last fortnight, the Government bond market broke wide-open (TIME, March 22). Hence, the natural assumption last week was that the Reserve Board might be ready to let interest rates seek a higher level. Said Mr. Eccles in correction...
...sense was the Grey Friday selling a reflection on Government credit. What the bond market showed, clearly, concisely, was growing apprehension over the course of inflation. With inflation come higher interest rates, and the cost of money and the price of bonds, whose rate of retirement is fixed, work in an inflexible inverse ratio. The current downward trend in bonds set in just about the time the Federal Reserve Board was getting set to cut excess bank reserves for the second time, a move which was sure to boost short-term if not long-term interest rates...
Furthermore, a quick glance at the charts showed that the great bull bond market of the 1920s turned its crest early in 1928 when the real "boom" still had a year and a half to run. But even if bond buyers overlooked that last week, they could not, and did not, overlook two ominous signals from Washington. One was President Roosevelt's observation in his fireside talk that "the dangers of 1929 are again becoming possible, not this week or month but within a year or two." The other signal was that the last official caller at the White...