Bond Market Sells Off on Report of Immunity for Lewinsky

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CBS News

report that Whitewater special prosecutor

Kenneth Starr

has decided to grant full immunity to former White House intern

Monica Lewinsky

, supposedly in exchange for testimony that could be damaging to

President Clinton

, has sent bonds into a tailspin in the last hour.

A spokesman at

CBS News'

national desk said correspondent Bob Schieffer reported the news at 11:40 a.m. EST. By about 1:25 p.m. the benchmark 30-year Treasury bond was down more than half a point. Its price had dropped 21/32 to 103, its yield rising to 5.91%.

Market analysts noted that with trading light ahead of the release Friday morning of the

Labor Department's

monthly employment report, the market is vulnerable to large price swings. But they said bonds apparently are dropping on the assumption that if Clinton is crippled by this matter, the dollar will suffer at least a temporary drop. Any drop in the dollar hurts dollar-denominated assets. That logic hit bonds two weeks ago, when allegations first surfaced that Clinton had an affair with the 24-year-old and then urged her to lie about it under oath.

"The thinking is that if he did offer her full immunity, then she does have something worthwhile to say,"

Technical Data

analyst Ken Logan said. "That could affect the dollar's advance and then the bond market, so we're seeing some liquidations."

The news had no apparent effect on the stock market, with the

S&P 500

down less than 2 at 1005.