Search

The article offers information on the cost of renting money. It states that long-term borrowing is represented by the yield on lower-medium grade corporate bonds, whereas, short-term borrowing appears in the interest rates on prime commercial paper. It mentions that mortgage bonds, secured by specific assets, are better risks than debentures, which have no specific claim on assets.

The author reflects on the importance of bond yields. Particular focus is given to long-term interest rates in the corporate bond market following announcement of U.S. President Richard Nixon's economic policy. He says bond yields have dropped as a response to the anti-inflation thrust of the policy. He explains that the market rate implies that investors were expecting inflation at an annual pace of 3.75% at a time when price indexes were rising.

The article recommends that investors evaluate bond yields. It examines the attraction of corporate and local government bonds during a decline in the stock market. It explains the consistency of demand for Treasury bills, the vulnerability of bonds to inflation and their opportunity to nail down the interest rate. It offers information on the returns on investments from bond markets including Arkansas Power and Light Co., Federal National Mortgage Association and Fort Worth in Texas.

This section offers news briefs related to the business sector of the U.S. as of February 1970. Finance analysts believe that the decline in the interest rates in the country is seasonal and it is influenced by the weakening in the demand for public funds. An increase in corporate bonds issued in January has contributed to the change in the trend in the interest rates. Manufacturing industries are operating at 77 per cent of their capacity which is considered as the lowest rate since the last month of 1960.

This section offers business news briefs as of April 1969. Business output is increasing at a faster pace since the beginning of the year, with March seeing the highest point, resulting in an increase of 16 billion dollars in the gross national product (GNP) for the first quarter, a total of 903.4 billion dollars. Interest rates have peaked, reflecting an increasing demand for capital, while high-grade corporate bonds are down 7 1/2% compared to the 7 3/4% in March. The government has revised its budget surplus from 3.4 billion dollars to 5.8 billion.

The article reports on the challenges faced by the turnpikes in covering their bond interest payments in the U.S. in 1957. It mentions that turnpikes commissions are trying to increase revenues by revising their tolls, which aimed at cutting interests by getting state backing for bonds. As a result, the 10-month 1957 revenue for the road ran over 30%.

The article discusses the trend of increasing interest rates from the 90-day Treasury bills to long-term corporate bonds. It points out that the expanding economy is one reason for the increase in rates as money markets prepare for an onslaught of federal borrowing in October 1972. It indicates efforts of Federal Reserve Board to keep money supply growth down and keep the prime held below the 6% mark as it follows a slightly more restrictive monetary policy. It cites belief of some New York bankers that the prime will hit 6% before election day.

The article looks at the impact of the refusal of the U.S. Congress to increase the ceiling on government bond interest rates on the financial markets. One such impact is the rise of the three-month Treasury bill rate to 3.8% in August 1959. Government bond yields also reached a 38-year peak of 4.8% and corporate and municipal bond prices started dropping. Amidst the crisis, the Federal Reserve remains firm on its tight money policy.