China export slump pushes US Treasuries up

(Bond Market Recap for August 10th, 2012) Treasuries rose for the first time in six days after Chinese exports for July rose just one percent from a year earlier, down from the 11.3 percent growth in June, increasing the allure of safe havens. At a rate of 4.7 percent, Chinese import growth also fell short of expectations.

Yield on the benchmark 10-year notes dropped four basis points, or 0.04 percentage point, to 1.64 percent despite US budget deficits narrowing more than forecast in July. Yield on 30-year treasury bonds dropped one basis point to 2.74 percent in late afternoon trading, New York time. The budget deficit shrank 46 percent to $69.6 billion from $129.4 billion in July, 2011 partly due to how revenues and expenditures were booked last month.

10 Year Treasury Yield – 1 Month Chart

Bond funds were up on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) rising 63 cents, or 0.50 percent, to end the week at $125.70, while the Vanguard Total Bond Market ETF (BND) gained 10 cents, or 0.12 percent at $84.68.
US stocks changed little Friday finishing a week of gains despite disappointing data from China and the US that stoke fears of a global slowdown.

TLT 1 Month Chart

The Dow Jones Industrial Average (DJIA) added 42.76 points, or 0.3 percent, to finish the week at 13,207.95, after sinking 70 points in early trade. Led by PC maker Hewlett Packard (HPQ), 20 of the blue-chip index’s 30 components closed higher.  Walt Disney (DIS) and Cisco Systems (CSCO) were the biggest percentage decliners.

Dow Jones Industrial Average 1 Month Chart

Extending its gain for the sixth straight session, the S&P 500 Index (SPX) rose 3.07 points, or 0.3 percent, to 1405.87 with telecommunications outperforming and consumer staples off the most among its 10 business sectors. The tech-heavy NASDAQ Composite (COMP) climbed 2.22 points, or 0.1 percent, to close at 3020.86. Up 1.8 percent on the week, this is the index’s fourth straight week of gains.

  • Decliners just outpaced advancers on the NYSE.
  • Oil prices for August delivery dropped 49 cents to close at $92.87 a barrel.
  • Gold futures for December delivery rose $2.60 to $1,622.80 an ounce.

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