Treasuries fall on ECB speculation, Stocks up Slightly

(Bond Market Recap for September 5th, 2012) Yields on Treasury securities rose from almost one-month lows after reports suggested the European Central Bank may embark on an unlimited sovereign debt-purchase, easing demand for US securities.

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The benchmark 10-year Treasury notes fell as yields bounced off near one-month lows after Bloomberg reported the ECB’s blueprint, called the “Money Outright Transactions,” would focus on government bonds with maturities up to three years while removing the same amount of money from the system elsewhere to neutralize the money-supply. After dropping to 1.55 percent, the 10-year yield closed two basis points, or 0.02 percentage points, higher at 1.60 percent. Yields on 30-year Treasury bonds traded three basis points higher at 2.71 percent in late afternoon trading, New York time.

10 Year Treasury Yield – 1 Month Chart

Bond funds were mixed on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) loosing 60 cents, or 0.47 percent to end at $126.72, while the Vanguard Total Bond Market ETF (BND) remained unchanged over yesterday’s close at $84.94.

 TLT 1 Month Chart

US stocks closed nearly flat Wednesday with blue-chip shares ending slightly higher as Wall Street decided to wait and watch ahead of tomorrow’s ECB all-important policy meeting.  The Dow Jones Industrial Average (DJIA) climbed 11.54 points, or 0.1 percent, to 13,047.48, after trading in a narrow 77-point range. The breadth within the 30-stock blue-chip index remained positive with 18 stocks finishing higher, led by Alcoa (AA), Walt-Disney (DIS) and Boeing (BA).

Dow Jones Industrial Average 1 Month Chart

The S&P 500 Index (SPX) shed 1.5 points, or 0.1 percent, to 1403.44 with utilities faring he worst and materials pacing the gainers among its 10 business groups.  S&P-500 component FedEx Corp (FDX) slid nearly two percent after the company cut 2012 profit forecasts, citing weak global economy. Shares of rival UPS (UPS) were also hit on the news.  The NASDAQ Composite (COMP) reversed its winning ways, shedding 5.79 points, or 0.2 percent, to close at 3069.27. After plunging to a an all-time low yesterday, social media site Facebook (FB) jumped 4.8 percent after CEO Mark Zuckerberg said he wouldn’t start selling his holdings for at least another year.

  • Decliners managed to stay ahead of advancers on the NYSE.
  • Oil prices for October delivery gained 6 cents to close at $95.36 a barrel.
  • Gold futures for December delivery dropped $2 to close at $1,694.90 an ounce.

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