Treasury Yields Drop Most in a Month as Manufacturing Disappoints, Stocks Mixed

(Bond Market Update for July 2nd 2012) US benchmark 10-year and 30-year Treasuries advanced the most in almost a month after the Institute of Supply Management said its PMI index slipped to 49.7 in June from 53.5 in May.  Economists had expected the index to decline to 51.5.

As risk aversion returned to the market, government securities pared losses Monday with the benchmark 10-year yield sliding six basis points, or 0.06 percentage points, to 1.59 percent in late afternoon trading, New York time. The yield on 30-year Treasury Bonds also slipped six basis points to 2.69 percent after sinking as much as 10 basis points in early trade.

10 Year Treasury Yield 1 Month Chart


Bond funds were mixed on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) adding $1.02, or 0.81 percent, to settle at $126.22 while the Vanguard Total Bond Market ETF (BND) shed 1 cent, or 0.01 percent, to close at $84.37.

TLT 1 Month Chart 

US stocks closed mixed Monday with the Dow closing slightly lower after ISM data showed US manufacturing contracted unexpectedly in June for the first time in nearly three years, and the euro-area’s manufacturing declining further in June though the S&P 500 and NASDAQ ended modestly higher, recovering from early weakness.  The Dow Jones Industrial Average (DJIA) dropped 8.7 points, or 0.1 percent, to 12,871.39, after about 278 points on Friday following an agreement by the European leaders on fresh measures to curb the ongoing debt crisis. Winners and losers held equal ground within the 30-stock Dow with JP Morgan Chase (JPM) and American Express (AXP) leading the day’s gainers.  Boeing (BA), Caterpillar (CAT), Alcoa (AA) and Bank of America (BAC) were among the biggest decliners.

Dow Jones Industrial Average 1 Month Chart

The S&P 500 Index (SPX) rose 3.24 points, or 0.25 percent, to 1365.51 with telecom advancing the most among its 10 business groups.  The tech-laden NASDAQ Composite (COMP) ended 16.2 points, or 0.6 percent, higher at 2951.23 despite sinking to 2925.71 after shares of wireless equipment provider Brightpoint Inc (CELL) rallied 66.54 percent over news that Ingram Micro (IM) has agreed to acquire the company for about $622 million.

For every stock declining, more than two advanced on the NYSE.
Oil prices for August delivery slipped $1.21 to close at $83.75 a barrel.
Gold futures for August delivery shed $6.50 to $1,597.70 an ounce.

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