Treasuries tumble on jobs, ECB News; Stocks fly

(Bond Market Wrapup for September 6th, 2012) Treasuries tumbled Thursday, pushing the yield on 10-year notes to the highest levels in a month after the European Central Bank announced plans to bring down the borrowing costs of the region’s peripheral economies and data suggested US job growth is gaining pace.

Treasury 10-year yields rose from near one month lows as demand for haven assets eased after ADP Employer Services said US employers added 201,000 jobs in August, easily beating forecasts of 140,000 jobs gain. A separate report by the Labor Department said initial jobless claims declined by 12,000 to 365,000, the least in a month. The yield on the benchmark 10-year Treasury notes jumped seven basis points, or 0.07 percentage points, to 1.67 percent while yield on 30-year Treasury bonds traded surged nine basis points to 2.79 percent.

10 Year Treasury Yield – 1 Month Chart

Bond funds were down on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) losing 2.11 points, or 1.67 percent, to close at $124.61, while the Vanguard Total Bond Market ETF (BND) shed 20 cents, or 0.24 percent, to finish at $84.74.

TLT 1 Month Chart

US stocks broke out Thursday to close on a multi-year high after the European Central Bank President Mario Draghi followed up on his earlier pledge to preserve the euro and announced an open-ended bond buying plan. Sentiments received further boost after the latest batch of employment data raised the bar for August jobs data.  The Dow Jones Industrial Average (DJIA) zoomed 244.52 points, or 1.9 percent, to 13,292.00, the highest since December 28, 2007. All the 30 stocks within the Dow closed higher, led by the banks JP Morgan Chase (JPM) and Bank of America (BAC). Other prominent gainers were Cisco (CSCO), General Electric (GE) and Microsoft (MSFT).

Dow Jones Industrial Average – 1 Month Chart

The S&P 500 Index (SPX) rose 28.68 points, or 2.0 percent, to 1432.63, its highest level since January 2008. Materials, technology and financials fronted the gainers among its 10 business groups.  The NASDAQ Composite Index (COMP) surged 66.54 points, or 2.2 percent, to close at 3135.81, highest since November 2000.

  • Gainers outnumbered decliners 4-to-1 on the NYSE.
  • Oil prices for October delivery gained 17 cents to close at $95.53 a barrel.
  • Gold futures for December delivery rose $11.60 to settle at $1,705.60 an ounce.

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