Treasuries Fall on Europe Hopes, Stocks Up

(Bond Market Recap For June 5th, 2012) Treasuries retreated for the second day as markets speculated that European leaders may take steps to limit the sovereign-debt crisis and the record low yields achieved last week may not be sustained, easing demand for safe-haven assets.

Benchmark 10-year Treasury yields rose five basis points, or 0.05 percentage points, to 1.57 percent after touching a low of 1.51 percent earlier in the day’s trade. The benchmark yield is nearly one full percentage lower that the year’s high of 2.40 percent. Yields on 30-year Treasury Bonds rose 0.07 percentage points to 2.64 percent in late afternoon trade in New York.

10 Year US Treasury Yield – 1 Month Chart

Bond Funds were also down on the day, with the iShares Barclays 20 Year Treasury Bond ETF (TLT) falling $1.73, or 1.34 percent, to close at $127.60, while the Vanguard Total Bond Market ETF (BND) shed 17 cents, or 0.20 percent, to settle at $84.24.

TLT 1 Month Chart

US stocks closed higher Tuesday for the second day in a row, pushing the Dow Industrials in the green territory after five down sessions as investors cheered a better-than-expected services reading. Gains were however limited as the ongoing European debt crisis continued to weigh down investors’ sentiments.

The Dow Jones Industrial Average (DJIA) rose 26.49 points, or 0.2 percent, to 12,127.95, as the ISM Services index rose to 53.7 in May, beating economists’ expectation of 53.1. JP Morgan Chase (JPM), up 3.19 percent for the day, led the blue-chip index’s gains. 17 of the 30 components closed higher for the day as the index narrowed its year-to-date losses to 0.7 percent. Coca-Cola (KO), retailer Wal-Mart (WMT) and United Technologies were the laggards.

Dow Jones Industrial Average 1 Month Chart

The S&P 500 Index (SPX) climbed 7.32 points, or 0.6 percent, to 1285.50 with financials advancing the most among the index’s 10 business groups. Homebuilders PulteGroup Inc (PHM) and Lennar Corp (LEN) were the top gainers while construction-supply company Fastenal Corp (FAST) dropped the hardest.

The tech-heavy NASDAQ Composite (COMP) added 18.10 points, or 0.7 percent, to close at 2778.11 after mobile devices memory-chip maker SanDisk Corp (SNDK) jumped 5.53 percent.

Advancers out-ran decliners by nearly 3-to-1 on the NYSE.

Oil futures for July delivery gained 34 cents to close at $84.29 a barrel on NYMEX.

Gold futures for August delivery rose $3 to $1,616.90 an ounce.  

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