(Bond Market Wrapup for September 27th, 2012) – US Treasuries retreated for the first time in nine days, snapping its longest rally in nearly four years after Spain presented its budget for 2013, pledging necessary but painful deficit cuts that reduced the appeal of safe haven assets. Risk sentiments improved further after a revised government report claimed the economy added 386,000 additional jobs between March 2011 and March 2012 while initial jobless claims fell by 26,000 to 359,000 last week, the lowest since July.
The benchmark 10-year Treasury yield jumped five basis points, or 0.05 percentage point, to 1.65 percent. However, everything was not smooth on the economy front with Q2 GDP growth cut back to 1.3 percent from the previous estimate of 1.7 percent. Separately, durable goods order sunk 13 percent in August while the National Association of Realtors reported pending home sales dropped in August. 30-year Treasury bond yield rose six basis points to 2.84 percent in late afternoon trading, New York time.
Bond funds dropped with the iShares Barclays 20 Year Treasury Bond ETF (TLT) lost 89 cents, or 0.71 percent, to settle at $124.15, while the Vanguard Total Bond Market ETF (BND) shed 5 cents, or 0.06 percent to settle at $85.07.
US stocks spiked in afternoon trading to close higher Thursday with the S&P 500 snapping its five-day losing spree after Spain released its official 2013 budget. Sentiments got a further boost after the US jobs market returned better-than-expected data.
The Dow Jones Industrial Average (DJIA) finished 72.46 points, or 0.5 percent, higher at 13,485.97 after jumping over 109 points during the day’s trade. Breadth within the 30-stock index turned positive with the gainers outpacing decliners 23 to 7. Intel (INTC) and Proctor and Gamble (PG) were among the day’s biggest gainers.
AT&T (T) and Wal-Mart (WMT) lagged the blue-chip index most.
The S&P 500 Index (SPX) rose 13.83 points, or 1.0 percent, to 1447.15, snapping its longest losing streak since July. Financials, technology and energy gained the most while utilities dropped among its 10 business groups.
The NASDAQ Composite Index (COMP) added 42.90 points, or 1.4 percent, to end at 3136.60, up 6.9 percent for the third quarter with one day remaining.
For every stock declining, more than three advanced on the NYSE.
Oil prices for November delivery gained $1.87 to close at $91.85 a barrel.
Gold futures for December delivery jumped $26.90 to hit a seven-month high of $1,780.50 an ounce.