Treasuries fall on EU hopes, Stocks Up

(Bond Market Recap for June 19th, 2012) Treasuries retreated for the first time in three days amid speculations that the Fed will extend Operation Twist while investors bet EU leaders will take decisive action to contain the debt crisis from spiraling. Homebuilders filed for building permits in May at the fastest rate since Sep 2008 though housing starts, which are more affected by weather than permits, fell slightly short of expectations.

US 30-year Treasury bonds pared yesterday’s gains as yields rose from the lowest level in almost two weeks after EU leaders indicated that they may ease Greece’s tough fiscal targets set as a condition for receiving further bailout money. The yield on 30-year bonds rose seven basis points, or 0.07 percentage points, to 2.73 percent in late afternoon trading, New York time. The benchmark 10-year Treasury yield rose four basis points to 1.62 percent.

10 Year Treasury Yield 1 Month Chart

Bond Funds were down on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) shed $1.66, or 1.31 percent, to close at $125.42 while the Vanguard Total Bond Market ETF (BND) lost 11 cents, or 0.13 percent to close at $84.32.

TLT 1 Month Chart

US stocks closed higher Tuesday on hopes of further assets purchase by the US central bank as the Federal Reserve’s two-day long FOMC meeting started today. Sentiments were further buoyed pushing US indexes to five-week highs as housing data proved robust.
The Dow Jones Industrial Average (DJIA) added 95.51 points, or 0.8 percent, to 12,837.33, after rising more than 150 points during the day’s trade. Among the Dow, 23 of the 30 components finished in Green led by Microsoft (MSFT), Caterpillar (CAT) and Bank of America (BAC).  JP Morgan Chase (JPM) rose 2.2 percent while Bank of America shot up 4.5 percent. Wal-Mart Stores (WMT), McDonald’s and Hewlett-Packard (HPQ) were among the blue-chip losers.

Dow Jones Industrial Average 1 Month Chart

The S&P 500 Index (SPX) rose 13.20 points, or one percent, to 1357.98 with materials and financials advancing the most among the 10 business groups.  The tech-heavy NASDAQ Composite Index (COMP) jumped 34.43 points, or 1.2 percent, to close at 2929.76.

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

Oil prices for July delivery gained 75 cents to settle at $84.03 a barrel.

Gold futures for August delivery shed $3.80 to finish at $1,623.20 an ounce.

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