Two weeks ago the market seemed to be focusing on the wrong events, and prices rose considerably. From the nadir of the price decline in October, Treasury bonds had rallied from 4 to 6 points.
Last week the markets zeroed in on the more fundamental problems of energy, the dollar and inflation. As a result, about half of the recent gains were lost. For example the long Treasury bond had sold at a dollar price of 104 1/4 on Dec. 6. One week later, the bonds dropped to 100 1/4 before rebounding by more than a full point.
The State of Oregon general obligation issue that was priced so cheaply two weeks ago and had jumped quickly to a premium, fell back to the original issue price last week.
Several double-A corporate issues were marketed last week. Two came early in the week at 11.40 percent and 11.32 percent. As the market deteriorated, the Northern Indiana Public Service finally came with an 11.75 percent return.
The disaster of the week was the $200 million Washington Public Power System revenue issue. Although some of the longer-term bonds returned 8 1/2 percent, the price was pushed while the market was fading. bOnly $50 million sold, and when the unsold balance was thrown on the open market to trade, the price fell 5 points. That pushed the yield up to 9 percent.
The Treasury will offer a two-year note on Wednesday and a four-year note the following day. The two-year note will come in minimums of $5,000 while the four-year note will offer minimums of $1,000.