(Bond Market Wrapup for June 25th, 2012) Treasuries advanced after German Chancellor Angela Markel said proposals for joint EU wide deposit insurance or euro-wide bonds are incorrect and counterproductive. She instead favors a political union and stronger oversight mechanism instead, killing the hopes of France, Italy and Spain for a speedy resolution to bring down borrowing costs.
Yield on 10-year notes dropped seven basis points, or 0.07 percentage points, to 1.61 percent in late afternoon trading, New York time. Yield on 30-year Treasury Bonds dropped eight basis points to 2.68 percent despite sales of new homes in the US coming in higher than expected in May at an annualized rate of 369,000.
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 $1.82, or 1.46 percent, to $126.84 while the Vanguard Total Bond Market ETF (BND) gained 22 cents, or 0.26 percent, to settle at $84.35.
TLT 1 Month Chart
US stocks lost more than one percent Monday as investors turned pessimistic ahead of a key meeting this week in Brussels. Sentiments were soured after Greece Finance Minister resigned just four days into his job citing health reasons and Cyprus became the fifth nation to seek money from the region’s bailout funds to support its banks, citing Greek spill over.
The Dow Jones Industrial Average (DJIA) tumbled 138.12 points, or 1.1 percent, to 12,502.66, its third down day in four. Among the blue-chip’s 30 components, only retailer Wal-Mart (WMT) closed higher. Bank of America (BAC), Intel Corp (INTC) and Hewlett Packard (HPQ) were the biggest percentage losers.
Dow Jones Industrial Average 1 Month Chart
The S&P 500 Index (SPX) shed 21.30 points, or 1.6 percent, to 1313.72 with technology hitting the ground hardest among the index’s 10 business group.
The NASDAQ Composite (COMP) slipped 56.26 points, or 2.0 percent, to close at 2836.16.
For every stock that rose, more than three declined on the NYSE.
Oil prices for August delivery slipped 55cents to close at $79.21 a barrel.
Gold futures for August delivery rose $21.50 to $1,588.40 an ounce.