MONEY MARKET.

Auckland Star, Volume LXX, Issue 33, 9 February 1939, Page 8

MONEY MARKET.

INTEREST RATES STEADY. HeSMUeN IN ACSTBMtbIA. A sustained,firmness of .prices of Government bonds throughout January- suggests that there is no immediate prospect of a rise in interest rates, aatnough there are several factors operating -which, unless checked, may tend to bring about a period of dearer money, says the 'Melbourne Argus." All through January gilt-dged stock was in good demand. Banks were in the market fairly actively, showing moat interest ■in short-dated issues, and support also came from official sources, purchases out of the sinking fund apparently being made a little more regularly than usua'l. The "Argus" index shows that in January the average price of Government bonds maturing later than 1942 was £07 15 /a, compared with £96 10/ in December. £8,500,000 Loan. A new- loan of £8,300,000, which the Commonwealth Government proposes tq raise to finance the works programme, has been announced. It will be issued at par, carrying interest at the rate of £3 17/6 per cent for a currency of 14 years— similar terms to the £72,000,000 loan successfully completed in December. The success of tlie loan from a public point of View will depend to a large extent upon the available supplies of money on the market, having regard to the demands liiade in the first instance :by the December conversion loan, followed later rl>y local body issues since. Allowing for accrued interest, the December £72.000,000 Joan m now quoted at ft discount of about 10/ per cent, which possibly is a result of selling by investors who converted their holdings in December out of patriotic motives. It is unlikely that the market will -show j any recession until the impending ioan ' its disposed of. It should not be forgotten that demands on a limited local market in recent months have Ibeen heavy, and calls for new capital beyond the capacity of the market to supply might necessitate a higher rate of interest. Apart from this, however, there are several factors present m Australia, as well a e in other parts of the world, which are tending to threaten the continuance of cheaip .money. In Auswalia they are (a) a growing budgetry disequilibrium, (-b) increased expenditure for rearmament ipunpoees. and (c) prospects of increased taxation. , Central Bank Action. Against this has to 'be considered the official uteps taken to maintain cheap money and sustain business activity at a high level. The Commonwealth Bank, by subscribing £6,000,000 to the conversion loiwi, indicated that it wa» prepared to take appropriate central bank action to maintain the volume of credit in the community. The Melbourne and "Metropolitan Board of Worke obtained £650,000 last month at £4 2/6 for a iperiod of 15 years, the money 'being used to pay off maturing loans. The Sydney Water Board has a loan of £1,000,000 on issue at £4 5/ per cent for a currency of 10 years. The Brisibane City Council, it is underetood, obtained about £.tOO,OOO in Melbourne last month at £4 10' per cent, and the Box Hill City Council £28,000 at £4 2/6 per cent for 20 years. There lias been a fairly steady demand for money on firet mortgage, both from country and city .borrowers. Funds are available at 4% per cent for first-class risks, but most money is being 'lent at 4% per cent and 5 per cent. AT THE MART. WELLINGTON PRICES. Prices of fruit, vegetables and other produce in the Wellington market this week are quoted as follows* — Apples.—Dessert, 6/ to 10/ a bushel: cooking. 5/ to 7/. Pears.—W.B.C., 6/ to 10/ a three-quarter case. Raspberries.—9/ to 10/ a tin. Grapes, hothouse.—6d to 1/ alb Plums.—Deeeert, ,3/ to 5/ a half case; cooking, 2/6 to 3/fl; Blue Diamond* 3/6 to 4/6. Peaches.—Dessert, 2/6 to 4/ a half casenectarines, 2/6 to 4/ a half case; greengages. 6/ to 9/ a half case; apricots, 2/6 to 6/ a 'half case. Tomatoes.—Nelson, coloured. 2/6 to 3/6 a half, case, ripe 2/6. to 4/; local, 5/ to 6/0 a case. Beans.—6/ to 12/ a case; cucumbers outside, 5/ to 6/6 a half case Lemons.—s/ to 8/ a bushel. Peas.—9/ to 13/6 sack; potatoes. 6/ to HV a sack; onions, local. 8/6 to 9 6 ,i engur bag: swedes, 5/ to 7/ a casemarrows, 2/ to 3/ a case. ' Lettuce.—6d to 4/6 n case; cabbage. 1/0 to if a case; cauliflowers. 2/6 to .V ii case; pumpkins. 8/ to 13/6 a sacksliver beet, 1/ to 2/ a case; carrots, 5/6 13/6 a case; 272 a dOZen; A grade '