Treasuries rise as US stock rally loses steam

(March 27th, 2012) Treasuries rose as economic reports showed declines in home prices and consumer confidence.  Today’s rally showed not everybody believed that the bond bear market started yesterday. The bid-to-cover ratio at a government sale of $35 billion in two-year securities was 3.69, against an average of 3.53 for the past 10 sales.  That means there was 3.69 buyers for every bond available when all that is needed is 1.

Yields on 10-year Treasuries tumbled 0.07 percent or 7 basis points, to 2.18 percent. They are heading for the biggest monthly gain since Dec. despite falling 21 basis points in March. Yields on 30-year Treasury bonds dropped as the Fed purchased $1.97 billion of Treasuries today under a plan to replace $400 billion of shorter maturities with long-term debts to lower borrowing costs.

The iShares Barclays 20 Year Treasury Bond ETF (TLT) added 0.81 points, or 0.72 percent, for the day, while the Vanguard Total Bond Market ETF (BND) gained 0.14 points, or 0.17 percent over yesterday’s close.

US stocks closed lower Tuesday as investor’s found little reason to push ahead to the day’s economic data and took a break after Monday’s rally.

The Dow Jones Industrial Average (DJIA) dropped 43.90 points, or 0.3 percent, to 13,197.73, after surging more than 1 percent Monday canceling last week’s gains. According to S&P/Case-Schiller index, home prices in 20 major cities dropped 3.8 percent year-on-year in Jan to the lowest level since 2002.   The Conference Board’s Consumer Confidence Index also slipped to 70.2 in March from 71.6 in Feb. Drug-maker Pfizer (PFE) topped the day’s gainers as the 2010 health care reform law was taken up by the Supreme Court. Bank of America (BAC) weighed on the Dow after Baird Equity Research downgraded the stock.

The S&P 500 Index (SPX) slipped 3.99 points, or 0.3 percent, to 1412.52 with the financial sector declining the most. Utilities in the 10-sector index was the day’s best performer.

The tech-heavy NASDAQ Composite (COMP) shed 2.22 points, or 0.1 percent, to close at 3120.35.

The Dow has climbed 8 percent, the S&P 500 has added about 13 percent and the NASDAQ is up over 20 percent so far this year.

Decliners just outpaced advancers on the NYSE.

Home builder Lennar Corp (LEN) jumped 4.7 percent after earning came in better-than-expected.

Oil futures for May delivery gained 30 cents to close at $107.33 a barrel.

Gold futures for April delivery shed 70 cents to $1,684.90 an ounce.


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