Treasuries Advance on Spanish Bank Bailout Skepticism, US stocks Pare Gains

(Bond Market Wrapup for June 11th, 2012) Investor optimism was short-lived on speculation a Spanish bank bailout will provide temporary relief to the ongoing European sovereign debt-crisis, pushing 30-year Treasury Bonds higher for the first-time in six days.

Yields on Spanish and Italian bonds jumped while US debts erased earlier losses on bets that the 100 billion euro Spanish bank bailout will prove inadequate to halt the spread of a contagion. Advancing stocks had earlier lured investors to higher yielding assets. Yield on the benchmark 10-year Treasury dropped five basis points to 1.59 percent in late afternoon trading, New York time, after surging as much as nine basis points to 1.73 percent earlier in the day.

 10 Year Treasury Yield 1 Month Chart

Bond Funds were also up on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) adding 57 cents, or 0.46 percent, to settle at $125.78, while the Vanguard Total Bond Market ETF (BND) gained 7 cents, or 0.08 percent to close at $84.23.

TLT 1 Month Chart

US stocks closed lower Monday despite starting off on a high following the year’s best week as investor enthusiasm over Spain’s $125 billion bank bailout deal fizzled and investors fretted over the upcoming Greece election.   The Dow Jones Industrial Average (DJIA) wavered, closing 142.97 points, or 1.1 percent, lower at 12,411.23, despite gaining as high as 96 points in early trade. 26 of the 30 components within Dow dropped with Bank of America Corp (BAC) Alcoa (AA), Caterpillar (CAT), Hewlett Packard (HPQ) and JP Morgan Chase (JPM) leading the loser’s list.

Dow Jones Industrial Average 1 Month Chart


The S&P 500 Index (SPX) lost 16.73 points, or 1.3 percent, to 1308.93, led by the technology sector. Telecommunications fared the best among the 10 business sector index. The NASDAQ Composite Index (COMP) dropped 48.69 points, or 1.7 percent, to close at 2809.73 after Apple Inc (AAPL) lost 1.6 percent after the technology giant unveiled its latest iOS6 operating system and a new revamped MacBook.

For every stock gaining, two stocks fell on the NYSE.

Oil prices for July delivery slipped $1.40 to close at $82.70 a barrel, the least since October.

Gold futures for June delivery rose $5.40 to $1596.80 an ounce.  

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