| Show BOND STRENGTH REAL SURPRISE Volume of Trade Greatest In Two Years For FOl For For- Up nr ny nov BYRON ROX SELLER SEI-LEK Special of Tue he Copyright 1927 By The Tho Th Consoli Consoli- Consolidated Consolidated Consolidated dated Press Association NEW YORK Jan l The 15 13 story ot of the tho th weeks week's week developments developments In the bond market Is one ot of great creat activIty activity ity accompanied by steadily te dlly rising prices with new new- favorites taken up tip as the th advance In others other down n temporarily Again Acain tho aver aver- averages averages averages ages have made n a a new high since 1 13 for domestic bonds bond and a aneW anew anew neW high bight for all II time timo for tor tho the for tor- foreign tor eign group croup The Thc strength In the market has been a even to those who were most optimistic about the tho reo re- re reinvestment investment demand two weeks ago It had been expected that the large disbursements of ot Interest and dividends on the first o ot the tho year year-a a record breaking sum byth by bytho bythe the tho would way way would flow back Into Investment securities but th the tho ro- ro re result 0 suIt sult exceeded all anticipations Naturally enough It wM wits wan the higher yielding varieties which were in the most mot urgent demand because these combine speculative possibilities with Investment value and yet Set et tho the called so-called gilt-edge gilt bonds were Vero not neglected nn and United States government securities ties tics held firmly around the th best be prices of ot the tho month and of ot last year with the treasury obligations selling at approximately the tho th high high- highest cst I Iest est since Ince they were first put out The volume of ot trading on the ex- ex exchange chine cx-chine change on ono one day of ot tho week was Wa the greatest In two years anti thIs does not take Into account the dealings the over which in inome some ome Issues Issue are arc always larger than those made mado on the tho board The Tho question asked naked now Is how much further the th advance Is like like- likely like likely ly Iy to go eo and whether or or not a reaction Is In order Of Ot course a nto to that no one can speak v confidence ence but at least it can be said that there Is no change chance or any sign Sim or any change chanse In the fundamentals back of ot the rl ris These are first the abundant supply of ot money and second second- the downward trend In commodity prices Ot Of the th two the th mane money factor Is playIng the larg largest st part just now The rhe Th trend In commodities commodities ties tics operates operate as an Influence on bond prices very slowly but falling rates for money act as an Immedi Immedi- Immediate Immediate ate stimulant Now what Is th the situation with regard retard to money The quotation for day to day to funds which I Is of ot the most In- In Interest interest In terest to speculators speculator In stock stocks is not so important as In the trend of commercial paper Still It Is interesting that buyers of ot stock on borrowed money have been able to finance their commitments thIs week at a lower rate rat on the average than In months past More significance Is the th decline in the toJ quotation tor for bankers acceptances and e a distinctly easier ton tone I In Inthe lithe the market for commercial paper hIGhER RESERVE RATIO TIO The rho weekly statement of ot the Federal Reserve banks bank shows show at a reserve ratio over tour four points s higher than It was a a week ago and more mor than 2 points above what It was wa In the th same week ot of 1926 Holdings of discounted bills ar are down heavily on the week weel and slightly on the year ear Part ot of othis this Is Seasonal but whatever the reason reMon ithe the tact fact remains the tho th oam am the tho th busIness of ot the tho country Is Inc ba-Inc be- be beIng leg Ing carried on with less recourse to tho facilities of ot the th federal re- re tervo re-tervo servo system Under these circum- circum circumstances stances It was natural that reports ot of a prospective reduction In the rediscount of the th New York reserve re- re serve erv bank should have hav becom 5 widespread No action to this thia et- et f oct was taken at this weeks weel's meeting however That something ot of the tb k kid d will ho bo b done don In the themore themore more or less lea immediate Imme late futuro is confidently believed The Th only argument to the tho th contrary is I that thata thata a reduction might bo be taken as an invitation to Increased speculative activities Bill DIU VI 11 It any ono one on group croup of bonds was singled out for specIal pedal attention It was Vas the th foreign group The Th bid bid- bid up ding up process g went on with moro more enthusiasm In this thia part ot of tho list than anywhere else ole and obligations ot of o France Germany and Italy In Europe Europ and of ot Brazil in South America went to new high levels Sometimes there was reason for tor tho the higher market valuation In the tho th financial and eco ceo economic eco economic conditions In lit the countrIes represented oi ted d but more often otten th there re was no change chance whatever in the actual situation of ot tho debtor na- na nation tlona na-tlona tion It was wa simply limply that domestic securities having advanced so o far that the th yields on them were no nolo lo ge to those thos buyers buyer s assume assum a a amount of risk there thero was a 0 di- di diversion di dl diversion version to tho ho larger larer return ob- ob ob obtainable tamable on foreign obligations Th The only proviso was that there thero be no real adverse de the th particular country or security Involved in For Instance nothing new has ha taken place In Italy to make mak interest t and prin- prin princIpal prin principal cipal on Italian dollar bonds more secure than It was six months month ago What has happened Is that all the theother theother theother other sven seven per cent European dollar loans having gone tone through their previous high hit points the Italian J Issue ls ue u move moved up In sym sym- sympathY sym sym- sympathy sympathy pathy It If this process should go goon goOn eoon on a fw tow weeks mor more seven IOven percent per percent percent cent returns return In good rood foreign bonds woul would become as rare as they were common during most ot of 1926 As As It Is Belgian obligations are ale to yield only CV- CV C 10 p per r cent and the th same amo Is true tru of ot most of the German descriptions The Th sante am point may be b made mado with regard retard to domestic railway bonds The Th Junior Issues which have havo been In ill such high favor tavor this are arc not protected by any larger equities In either assets or earnings than they thy have hav been for tor some om tim time now Her Here too It In is a 0 narrowing of ot the th spread prad between nth the tho best and the th second beet but which always as Iway accompanies a x rising mar market ket for flied interest t rate rat tic cuil-tic tics |
