Treasuries rise on global growth worries, US stocks extend losses

(March 22nd, 2012) Treasuries advanced for the third day, the longest winning streak in almost a month, after reports showed China’s manufacturing and euro-region output weakened, boosting US debt’s safe-haven appeal. The number of American’s filing for unemployment claims dropped to a four-year low which clearly was not enough to shake off the bad mood.

The US auction of $13 billion 10-year Treasury Inflation Protected Securities (TIPS) drew a record low negative yields. The auction drew a negative yield of 0.089 percent, the second such event in a row when yields dropped below zero.  The principal of a TIPS increases in value along with inflation which is one reason why investors are willing to purchase them with a negative yield.  You can learn more about TIPS here.

Yield on 10-year notes dropped 0.02 percent to 2.28, touching 2.24 percent during the day’s trade, the lowest since March 14. 30-year yields decreased two basis points to settle at 3.36 percent

The iShares Barclays 20 Year Treasury Bond ETF (TLT) added 0.36 points, or 0.32 percent, for the day, while the Vanguard Total Bond Market ETF (BND) gained 0.12 points, or 0.14 percent over Wednesday’s close.

US stocks closed lower Thursday as global growth worries weighed on investors with the S&P dropping for the third straight session. Market watchers attributed the decline to the market’s double digit growth in the first quarter.

The Dow Jones Industrial Average (DJIA) shed 78.48 points, or 0.6 percent, to 13,046.14, which analysts attributed to low-volume profit taking during spring break. Only eight of the 30-component Dow ended higher with aluminum producer Alcoa Inc (AA) dropping the most, losing 2.5 percent on the day. Heavy-equipment OEM Caterpillar Inc (CAT) and Chevron Corp (CVX) both lost 2.4 percent as weak manufacturing data in China and Europe hit commodities and related firms.

The S&P 500 Index (SPX) dropped 10.11 points, or 0.7 percent, to 1392.78 with the energy and natural resources sector declining the most. Consumer staples advanced the most in the 10-sector index. This was the index’s first close below the psychological 1,400 level in more than a week.

The tech-heavy NASDAQ Composite (COMP) slipped 12 points, or 0.4 percent, to settle at 3,063.32, still up more than 17 percent since the start of 2012.

For every 3 stocks declining, roughly one stock advanced on the NYSE.

Oil prices for May delivery declined $1.92 to close at $105.35 a barrel.

Gold futures for April delivery shed $7.80 to $1,642.50 an ounce.

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