Treasuries advance on Spain jobless reports, US equities post weekly losses

(Bond Market Wrapup for October 26th, 2012) – Treasury prices rose, pushing yields of 10-year notes down from nearly the highest in five weeks after the latest jobs report showed Spanish unemployment rate climbed to a record high, raising concern the region’s debt crisis may deteriorate. Risk sentiments soured further after German Finance Minister Wolfgang Schaeuble reportedly said there are doubts over Greece meeting its targets for European bailout.

The US economy meanwhile expanded at a faster clip of 2 percent in the third quarter, beating analysts’ expectations of a 1.7 percent growth. The Commerce Department report also showed core inflation slowing down, producing positive real 10-year yields for the first time since 2011. Separately, the Thomson Reuters/University of Michigan consumer sentiment index rose to 82.6 in October from 78.3 the month before.

The benchmark 10-year yield dropped seven basis points, or 0.07 percentage point, to 1.76 percent. 30-year Treasury bond yield dropped six basis points to 2.92 percent in late afternoon trade, New York time.

Bond funds advanced with the iShares Barclays 20 Year Treasury Bond ETF (TLT) adding $1.78, or 1.47 percent, to $122.64, while the Vanguard Total Bond Market ETF (BND) rose 17 cents, or 0.20 percent, to $84.74.

Major US equity averages finished a choppy trading session nearly unchanged Friday, but logged another week of losses after lackluster earnings reports did little to offset worries about a global slowdown.

The Dow Jones Industrial Average (DJIA) added 3.53 points, or 0.03 percent, to 13,107.21, off 1.8 percent for the year. Breadth within the blue-chip index turned negative with 18 of the benchmark’s 30 components finishing lower. Bank of America (BAC), JP Morgan Chase (JPM) and Alcoa (AA) were the day’s top percentage decliners.

United Technologies (UTX), Intel (INTC) and Microsoft (MSFT) were pacing the advancers.

The S&P 500 Index (SPX) fell 1.03 points, or 0.07 percent, to 1411.94 with financials faring the worst and telecommunications gaining the most among its 10 business sectors. The benchmark extended its decline to 1.5 percent for the week.

The NASDAQ Composite Index (COMP) added 1.83 points, or 0.06 percent, to close at 2987.85, off 0.6 percent for the week, posting its third straight weekly loss.

For every stock 3 stocks declining, nearly two advanced on the NYSE.

Oil prices for December delivery gained 23 cents to close at $86.28 a barrel.

Gold futures for December delivery fell $1.10 to $1,711.90 an ounce.

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