Treasuries fall as market increases bets on inflation, US stocks Rise

(March 26th, 2012) 30-year bonds fell the most in a week after Bernanke said continued accommodative monetary policy is needed to reduce unemployment further, boosting speculations that inflation will rise. Sales of previously owned homes remained at almost at a two-year high.

Treasuries pared some of previous gains after Bernanke’s dovish statement was construed as inflationary. Boosting demand from consumers and businesses would require continued accommodative policies, the chairman said in a speech in Arlington, Virginia. The pace of improvement in the labor market may not be sustained without expansionary monetary measures, he noted. US ten-year yields rose 0.01 percent, or 1 basis point, to 2.25 percent, the highest since December 2010. Yields on 30-year bonds jumped three basis points to 3.34 percent.

The iShares Barclays 20 Year Treasury Bond ETF (TLT) shed 0.58 point, or 0.51 percent, for the day, while the Vanguard Total Bond Market ETF (BND) lost 0.01 points, or 0.01 percent over Friday’s close.

US stocks rallied Monday, erasing last week’s losses after Federal Reserve Chairman Ben Bernanke indicated that the central bank is willing to pursue a low interest regime to boost employment.

The Dow Jones Industrial Average (DJIA) zoomed 160.90 points, or 1.2 percent, to 13,241.63, recouping more than the 152-point it lost last week. 29 of the 30-component Dow gained Monday with the technology sector leading the pack. International Business Machines Corp (IBM) contributed the most to Dow’s gain, closing at a record high of $207.77. United Technologies (UTX) and Chevron Corp followed closely with 2.08 percent and 1.39 percent respectively.

The S&P 500 Index (SPX) rose 19.40 points, or 1.4 percent, to 1416.51, with technology, healthcare and consumer discretionary advancing the most. All the 10 sectors closed higher Monday.

The tech-laden NASDAQ Composite (COMP) added 54.65 points, or 1.8 percent, to close at 3122.57, its highest level since November 2000.

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

Oil prices for May delivery gained 16 cents to close at $107.03 a barrel.

Gold futures for April delivery rose $23.20 to $1,685.60 an ounce.

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