Bonds Talk

The bond market has had its say about the affairs of the world during the past month. Better evidence of improvement in Europe than any economic thesis has been the action of foreign bonds, all much slandered during the Presidential campaign. The pace was set by German government and industrial issues. Last week, most of them were up 100% from their lows of summer and are at better prices than at any time during 1932. Great strength was also shown by Belgian, French, Norwegian and Swedish issues. Most South and Central American issues are well up from their 1932 lows, still far under the highs.

Meanwhile the bond market has voiced ever lower opinion of the future of Japanese credit. But it hinted strongly at U. S. recognition of Russia under the Roosevelt regime. Last week Russian Imperial 5 1/2% bonds, which sold last summer at about half a cent on the dollar, rose to four cents on the dollar.

Regarding domestic matters, the bond market spoke its disbelief in the likelihood of inflation or devaluation of the dollar, its confidence in low money rates. High-grade issues forged ahead even when the inflationists were speaking their loudest in Washington (see p. 12). Many good 5% issues sold above par and second-grade bonds jumped more rapidly than stocks. Transactions were on a large scale and many recent sessions resulted in over 100 new highs. Early this week all bonds, including Governments, were faltering a little. Altogether bonds on the Stock Exchange gained $1,500,000,000 in value since Christmas.

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