Word: bonde
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Dates: during 1950-1959
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...fear of a new burst of inflation. Many a Wall Streeter shares the Fed's worry, feeling that anxiety over inflation has lifted stock prices too quickly on the basis of current earnings. This has caused a sharp change in the "spread"-the difference between stock and bond yields. As stock prices have risen, bonds have dropped (see below); while the return on blue chips has fallen to 3.8%, the best bonds now yield more than 4%. In the past (1929, 1937, 1946 and last summer), when bond yields topped or equaled stocks, big investors went from stocks...
Sears, Roebuck & Co. last week announced plans to sell a $350 million bond issue, the largest industrial bond offering in U.S. history. But before signing a contract with its underwriters, Sears said it wanted to take a careful look at conditions in the bond market. What particularly alarmed Sears and other prospective corporate-bond issuers was the situation in U.S. bonds. After a year-long rise, Government bonds were going through the fastest, worst shakedown in postwar history, causing dealers to employ such expressions as ''chaos," "rout" and "panic...
...drop in U.S. bonds stemmed largely from speculation. Because there is no margin requirement on Government bonds, speculators have been able to buy them for as little as 2% in cash. Last winter and spring, as credit eased, speculators correctly guessed that Government bonds would rise. Buyers poured into the Government bond markets and made a killing, as competition among bond buyers pushed prices of new issues far above par. For example, the 3½% bond that came out in February was bid up to 107.10, a price that gave speculators a profit of 250% on their actual cash investment...
...Fumble. But in June the merry-go-round slowed down, as the recession bottomed out and business started up. Speculators, anticipating renewed inflation and Government tightening of credit, started getting out. As Government bond prices fell, shoestring speculators were forced to dump their holdings, driving down prices more. One new Treasury issue, the 2⅝% bonds, fell to 95.16 last week, despite the Treasury's unusual step, in July, of buying back nearly $600 million of the issue. An even sharper skid hit the 3¼% issue: it dropped...
...Federal Reserve Board fumbled the job, adding to the trouble. The Fed, which regularly buys 91-day Treasury bills as part of its normal operations, cryptically announced that it was "broadening" its open-market operations. This led many to believe that the Fed intended to buy enough long-term bonds to cushion the market; it gave courage to the market, attracted buyers back into bonds. But the Fed's purchases were limited to buying $1 billion of one-year certificates to aid the Treasury's July refinancing operation. As the effect of this wore off and hopes...