(Bond Market Recap for June 18th, 2012) The yield on 30-year Treasury bonds dropped to its lowest level in more than a week ahead of the Fed’s two-day policy meeting amid speculations on whether the central bank will extend its assets purchase programme.
Following the Fed’s purchase of $1.92 billion in long-term securities, long bonds erased gains briefly. Yield on 30-year bonds dropped 2 basis points, or 0.02 percent, to 2.67 percentage points in late afternoon trading, New York time. The yield on the benchmark 10-year Treasuries changed little at 1.58 percent despite dropping to 1.56 percent in early trade.
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) added 68 cents, or 0.54 percent, to finish at $127.08, while the Vanguard Total Bond Market ETF (BND) gained 1 cent, or 0.01 percent to close at $84.43.
TLT 1 Month Chart
US stocks closed mixed Monday after a choppy day’s trading as relief over the win of pro-bailout party in Greece proved fleeting. Sentiments were further strained as Spanish borrowing costs for 10 years breached the seven percent level, hitting a euro-era high that ultimately pushed the Dow industrials lower for the day. The Dow Jones Industrial Average (DJIA) shed 25.35 points, or 0.2 percent, to close at 12,741.82, after sinking as much as 71 points and rising more than 14 points. 19 of the 30 components within the Dow closed lower led by Alcoa (AA), Chevron (CVX), Bank of America (BAC) and General Electric (GE). The biggest gainers included Verizon (VZ), Kraft Foods (KFT) and Home Depot (HD).
Dow Jones Industrial Average 1 Month Chart
The S&P 500 Index (SPX) rose 1.94 points, or 0.1 percent, to 1344.78, its third straight day of gains. Home builders, restaurant and technology advanced the most among the 10 business groups while energy closed 0.8 percent lower. Homebuilder Lennar Corp (LEN) jumped 4.13 percent after a gauge of confidence for builders hit a five year high.
The tech-heavy NASDAQ (COMP) added 22.53 points, or 0.8 percent, to close at 2895.33 after NASDAQ component Facebook (FB) rose 4.7 percent.
For every stock declining, nearly two stocks advanced on the NYSE.
Oil prices for July delivery slipped 76 cents to close at $83.27 a barrel.
Gold futures for August delivery dropped $1.10 to $1,627.00 an ounce.