Friday, December 25, 1998

Business Briefcase

Mortgage rates rise for the first-time in six weeks

WASHINGTON (AP) -- The average interest rate on 30-year fixed-rate mortgages rose for the first time in six weeks, to 6.77 percent this week, Freddie Mac, the mortgage company, reported Thursday.

The increase, from 6.69 percent, brought the average to its highest level since the start of December. It was the first increase since mid-November.

The average reached a 31-year low of 6.49 percent in early October. It has remained below 7 percent since mid-June. It peaked for the year at 7.22 percent in late April.

"Although mortgage rates inched up this week, we expect they will remain ... around 7 percent for the forseeable future," said Freddie Mac economist Robert Van Order.

Fifteen-year mortgages, a popular option for refinancing, averaged 6.41 percent this week, up from 6.35 percent.

On one-year adjustable-rate mortgages, lenders were asking an average initial rate of 5.58 percent, the highest in four months and up from 5.55 percent.

The rates do not include add-on fees known as points, which averaged at or just over 1 percent of the loan amount for all three types of mortgages.

Rayovac to buy Latin America battery maker for $120 million

MADISON, Wis. (Dow Jones News) -- In a move to tighten its control over its brand name, battery maker Rayovac Corp. said it agreed to purchase ROV Ltd., a privately held battery maker in Latin America, for $120 million.

Shares tendered to clear way for American Airlines' acquisiton

RENO, Nev. (AP) -- Reno Air shareholders have overwhelmingly agreed to turn over their stock to American Airlines, virtually clearing the way for the Fort Worth-based company to take over the regional carrier.

American said that 84.5 percent of Reno Air's common stock holders and 99 percent of its preferred shareholders agreed to tender their holdings at priced of $7.75 and $27.50 a share, respectively.

DaimlerChrysler reports sales up 13 percent for 1998

FRANKFURT, Germany (AP) -- Sales at the newly merged DaimlerChrysler AG rose 13 percent this year to 260 billion marks, or $158 billion, the giant automaker reported Thursday.

Daimler-Benz AG and Chrysler Corp., which completed their $32.8 billion merger last month, had combined 1997 sales of Japan automaker

Isuzu to cut 4,000 jobs in restructuring drive

TOKYO (AP) -- Japanese car maker Isuzu Motors Ltd. announced Thursday it will eliminate 4,000 jobs and reduce debt as part of a restructuring drive to shore up profitability.

Isuzu is an affiliate of U.S.-based General Motors Corp.

Kmart recalls electric angel tree-top ornament

WASHINGTON (AP) -- Kmart Corp. is recalling about 132,000 electric angel tree ornaments because they contain flammable material and pose a fire hazard.

The angel ornaments are about 10 inches high and have gowns that are white, gold or silver. The angel figures have lights attached to each wrist and at its base.

Consumers should immediately stop using these ornaments and return them to Kmart for a refund. They can also call CPSC's hotline for more information anytime at (800) 638-2772.

GM parts unit Delphi announces details of stock offering

DETROIT (AP) -- General Motors Corp. plans to begin a public offering of shares in its big parts subsidiary, Delphi Automotive Systems, in the first quarter of 1999 with expectations of netting $1.5 billion.

Bond prices fall again in thin trading

NEW YORK (AP) -- Bond prices fell for the fourth consecutive session Thursday in lackluster holiday trading.

The price of the benchmark 30-year Treasury bond fell 9/16 point, or $5.63 per $1,000 in face value. Its yield, which moves in the opposite direction, rose to 5.21 percent from 5.18 percent late Wednesday, setting a one-month high.

Trading was thin Thursday as the bond market continued its downward spiral. The market closed at 2 p.m. and will not be open Friday because of the Christmas holiday.

In another indication of the U.S. economy's resiliency, new reports were released showing that personal income increased 0.5 percent and unemployment levels dropped to a seasonal 18-month low, further dampening belief that the Federal Reserve might cut interest rates any time soon.

On Tuesday, the Fed left the benchmark rate on overnight loans between banks unchanged at a four-year low of 4.75 percent. Central bankers had already cut the Fed funds rate by a total of 0.75 point, in three successive rate cuts on Sept. 29, Oct. 15 and Nov. 17.

Meanwhile, investors gave stocks a cheery holiday sendoff, sending the Dow Jones industrial average up for the sixth consecutive session. The Dow closed up 15.96 to 9,217.99.

In the broader market, prices of short-term Treasury securities were down between 3/32 and 3/16 point, and intermediate maturities were down between 5/16 point and -3/8 point, reported Bridge Telerate, a financial information service.

The Lehman Brothers Daily Treasury Bond Index, reflecting price movements on bonds with maturities of a year or longer, fell to 1,310.58 from 1,312.95 Wednesday.

Yields on three-month Treasury bills were 4.54 percent, as the discount fell 0.03 percentage point to 4.44 percent. Six-month yields were 4.68 percent, as the discount rose 0.02 percentage point to 4.52 percent. One-year yields were 4.70 percent as the discount rose 0.04 percentage point to 4.49 percent from late Wednesday.

Yields are the interest bonds pay by maturity, while the discount is the interest at which they are sold.

The federal funds rate, the interest on overnight loans between banks, remained unchanged at 4.50 percent.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds fell to 124 1/16 from 124 7/32. The average yield to maturity was 5.20 percent, up from Wednesday's 5.19 percent.