Treasuries fall as Fed holds back, Stocks Marginally Lower

(Bond Market Recap for August 1st, 2012) Treasury yields rose from near-record lows, pushing prices down after the Fed indicated readiness to initiate steps if the economy slowed down further, but keeping monetary policies unchanged at its latest policy meeting.

The benchmark US 10-year yield climbed five basis points, or 0.05 percentage points, to 1.51 percent as the US job market showed signs of recovery. The ADP employment data showed US private-sector employers added 163,000 jobs in July against Economists’ forecasts of 125,000 jobs. However, the ISM Manufacturing Index in July grew slower to 49.8 against forecasts of 50.1 from those polled by Construction spending growth was sluggish at 0.4 percent in June, compared to 0.5 percent forecasted by analysts.

10 Year Treasury Yield – 1 Month Chart

Bond Funds were also down on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) shed 92 cents, or 0.71 percent, to close at $128.78 while the Vanguard Total Bond Market ETF (BND) lost 29 cents, or 0.34 percent, to settle at $84.94.

TLT 1 Month Chart

US stocks closed slightly lower Wednesday as the Federal Reserve refused to initiate another round of assets purchase. Eighty percent of economists surveyed by Bloomberg News didn’t expect the Federal Reserve to initiate another of quantitative easing before the Sep 12 FOMC meeting anyway and while market participants believe the real fireworks will begin tomorrow after European central bankers meet to decide on monetary policies.

The Dow Jones Industrial Average (DJIA) slipped 32.55 points, or 0.3 percent, to 12,976.13, even though the breadth was positive for the day as 17 stocks moved higher within the Dow’s 30 components.  Bank of America (BAC), Boeing (BA) and Hewlett Packard (HPQ) were the day’s biggest percentage losers while Intel (INTC), Chevron (CVX) and Pfizer (PFE) finished higher.

Dow Jones Industrial Average 1 Month Chart 

The S&P 500 Index (SPX) shed 4 points, or 0.3 percent, to 1375.32 with utilizes dropping the most and energy outperforming among the 10-sector index.  The tech-heavy NASDAQ Composite (COMP) tumbled 19.31 points, or 0.7 percent, to close at 2920.21.

  • For every stock nine stocks declining, five advanced on the NYSE.
  • Oil prices for September delivery gained 79 cents to close at $88.85 a barrel.
  • Gold futures for August delivery rose $6.80 to $1,603.70 an ounce.

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