Treasuries fall for the first time in four days on economic report, banks lead stock rally

(Bond Market Wrapup for October 4th, 2012) – Treasuries snapped a four-day winning streak after a Labor Department report showed initial jobless applications rose by 4,000 to 367,000 for the week ended Sep 29, falling short of the projected 370,000. Factor orders also came in better than estimated with the August reading contracting by 5.2 percent versus estimates of a 5.9 percent decline.

Markets reacted favorably to ECB President Mario Draghi’s statement that the euro was irreversible and it’s up to the region’s politicians to seek help as needed.

Risk sentiments got a further boost after the latest FOMC minutes showed most participants thought risks could be managed since the committee could adjust asset purchases in response to market conditions. The Federal open Market Committee had announced plans to purchase $40 billion of mortgage bonds every month that aims to spur economic growth and bring down unemployment rate that’s stuck over eight percent for 43 months.

The benchmark 10-year Treasury yields rose five basis points, or 0.05 percentage points, to 1.67 percent while yield on 30-year Treasury bonds jumped six basis points to 2.88 percent in late afternoon trade, New York time.

Bond funds also fell with the iShares Barclays 20 Year Treasury Bond ETF (TLT) shedding $1.55, or 1.25 percent to close at $122.74 while the Vanguard Total Bond Market ETF (BND) lost 14 cents, or 0.16 percent, to end at $84.87.

US stocks rallied Thursday with the S&P 500 registering its fourth straight up session following upbeat labor market conditions and dovish comments from ECB President Mario Draghi.

The Dow Jones Industrial Average (DJIA) zoomed 80.75 points, or 0.6 percent, to 13,575.36. Bank of America (BAC), JP Morgan Chase (JPM) and Alcoa Inc (AA) led the session’s winners that included 25 of the index’s 30 components.

Home Depot (HD), Cisco (CSCO) and Intel (INTC) were among the biggest blue-chip decliners.

The S&P 500 Index (SPX) rose 10.41 points, or 0.7 percent, to 1461.40 with energy and financials fronting gains that included all the 10 major business groups.

The tech-heavy NASDAQ Composite (COMP) added 14.23 points, or 0.5 percent, to close at 3149.46.

For every stock declining, more than two advanced on the NYSE.

Oil futures for November delivery gained $3.46 to close at $91.71 a barrel.

Gold futures for December delivery rose $16.70 to $1,796.50 an ounce.

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