THE MONEY MARKET

Evening Post, Volume CXXVII, Issue 91, 19 April 1939, Page 12

THE MONEY MARKET

UPWARD TREND

BONDS AS INDICATORS

"Evening Post," April 19

Difficulty of raising local bodies' loan requirements in New Zealand at the current -ate of interest is understandable when New Zealand Government stock and bonds at current prices give a return of 4 to 4i per cent., or even over. Something of the kind is being experienled in the Australian money market. During March, states "The Australasian," interest rates continued to display a tendency to harden. Declines in prices of Government bonds, with a consequent rise in the average yield, were the most significant indication of this. Selling in the bond market, the barometer of interest rates, has been sustained, but the consequent fall in prices has apparently been cushioned by official support. During March the average price of Commonwealth bonds maturing after 1943 fell from £96 19s 2d to £96 Is 7d, and the average redemption yield rose from £3 16s lid per cent, to £3 17s 8d per cent. On bonds maturing in 1943 or earlier the redemption yield rose from £3 16s 2d per cent, to £3 16s 8d per cent. The money market has been hesitant during the period, the dominant factor being the prospect of further calls for funds for defence and State public works. Only a little more than half of the last £8,500,000 Commonwealth loan-which closed on February 21 was subscribed by the public. The rate of interest of that loan was 3 7-8 per cent., issued at par. The State Savings Bank of Victoria paid 4 per cent, (with certain-tax exemptions) for the conversioh of a credit foncier loan of £i; 000,000, having a currency of ten years/ Also a loan of £450,000 issued by the. Metropolitan Board of Works was offered at a rate of 4 1-8 per cent. to .mature in 1954. It was fully subscribed. Victorian building societies and similar lending institutions have noticed that borrowers ?re displaying a slight degree of caution before entering into commitments. Although there has been no quotable alteration in mortgage rates, securities are being examined with closer attention.