Treasuries trade at near one-month highs on Spain, Dow closes lower

(Bond Market Wrapup for October 2nd, 2012) – Treasuries traded at near the highest levels in a month as demand for safe assets spiked after Spanish Prime Minister Mariano Rajoy said Madrid won’t seek a bailout in the near-term following reports the Iberian nation may seek assistance as early as this weekend. Reuters had reported Monday that the country is likely to seek bailout by early next weekend to tide over its public finances though Germany has signaled Spain to hold off as Berlin thought the country was taking the right steps and may not need a bailout.

The benchmark 10-year Treasury yield dropped one basis point, or 0.01 percentage point, to 1.62 percent while yield on 30-year Treasury bonds also dropped one basis point to 2.81 percent in late afternoon trade, New York time.

Bond funds ended mostly lower with the iShares Barclays 20 Year Treasury Bond ETF (TLT) shedding 17 cents, or 0.14 percent, to close at $124.25 while the Vanguard Total Bond Market ETF (BND) finished the session unchanged at $85.04.

US stocks closed mixed Tuesday with the Dow industrials falling after Spanish Prime Minister Mariano Rajoy said a request for bailout was not imminent after Reuters had reported the country could seek help as early as this weekend.

The Dow Jones Industrial Average (DJIA) dropped 32.75 points, or 0.2 percent, to 13,482.36, recovering from a steeper 90-point drop. 19 of the Dow’s 30 components slipped in the red as the breadth turned negative with Du Pont (DD), Procter and Gamble (PG) and American Express (AXP) leading the biggest percentage decliners.

Chevron Corp (CVX) was the benchmark’s biggest gainer that included Microsoft (MSFT) and UnitedHealth Group (UNH).

The S&P 500 Index (SPX) clambered 1.26 points, or 0.1 percent, to 1445.75 with utilities and healthcare gaining the most and materials hitting the ground hardest among its 10 business groups.

The NASDAQ Composite (COMP) added 6.51 points, or 0.2 percent, to close at 3120.04 after the index’s biggest component Apple Inc (AAPL) reversed early course to end 0.3 percent higher.

Decliners had a narrow lead over advancers on the NYSE.

Oil futures for November delivery slipped 59 cents to close at $91.89 a barrel.

Gold futures for December delivery fell $7.70 to $1,775.60 an ounce.

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