Treasuries Rise as Investors turn Jittery Ahead of Q2 Results, Stocks Decline

(Bond Market Wrapup for July 9th, 2012) Treasuries rallied on investor safe haven buying as Spanish 10-year borrowing costs rose over 7%  and Italy’s 10-year yields rose above six percent.

10-year Treasury yields dropped to their lowest level in more than a month as investors speculated the Federal Reserve will announce restarting its assets purchase program at its Aug 1 policy meeting to boost the struggling labor market. The yield on the benchmark 10-year notes dropped four basis points to 1.51 percent while yield on 30-year Treasury Bonds tumbled four basis points to 2.62 percent in late afternoon trade, New York time.

10 Year Treasury Yield 1 Month Chart

Bond Funds were also up with the iShares Barclays 20 Year Treasury Bond ETF (TLT) rising $1.12, or 0.88 percent, to close at $128.18, while the Vanguard Total Bond Market ETF (BND) added 16 cents, or 0.19 percent to finish the day at $84.73.

TLT 1 Month Chart

US stocks closed lower Monday, extending losses for the third consecutive day as Corporate America lowered earnings forecast ahead of the second quarter results and investors turned jittery over worries that profits will shrink compared to the first quarter.
The Dow Jones Industrial Average (DJIA) slipped 36.18 points, or 0.3 percent, to 12,736.29, losing more than 207 points in the last three sessions. The breadth with the Dow was equally divided with 15 of the 30 components closing lower Exxon Mobil (XOM), Bank of America (BAC) and Du Pont (DD).  Boeing Co (BA) fronted the days’ winners after the firm sealed a $7.2 billion deal with Air-Lease Corp (Al).

Dow Jones Industrial Average 1 Month Chart

The S&P 500 Index (SPX) shed 2.22 points, or 0.2 percent, to 1352.46 with health-care rising the most and natural resources hitting the ground hardest among its 10 industry groups.  The NASDAQ Composite Index (COMP) shed 5.56 points, or 0.2 percent, to close at 2931.77. Payment processors Visa (V) and MasterCard Inc (MA) tanked after Swiss bank UBS AG downgraded the networks over revenue worries.

Decliners managed to stay ahead of advancers on the NYSE.
Oil prices for August delivery gained $1.54 to close at $85.99 a barrel.
Gold futures for August delivery rose $10.20 to $1,589.10 an ounce.

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