10-year yields fall to near three-week low on stimulus jitters, Stocks sink

(Bond Market Recap for August 30th, 2012) Treasuries rose, pushing yields of 10-year notes to the least in three weeks after a Commerce Department report showed the gauge of prices linked to consumer spending advanced 1.3 percent in the 12 months ended in July, the least since Oct 2009, and below the Federal Reserve’s target of two percent, bolstering speculations of another round of asset purchases.

The benchmark yield on 10-year Treasury notes fell three basis points, or 0.03 percentage points, to 1.62 percent. Yield on 30-year Treasury bonds dropped to the lowest level in almost two weeks to 2.72 percent during the day’s trade. The yield rose to 2.75 percent in late afternoon trade, New York time, lower two basis points over late Wednesday.

10 Year Treasury Yield 1 Month Chart

Bond Funds were up on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) gained 65 cents, or 0.51 percent, to $125.94, while the Vanguard Total Bond Market ETF (BND) added 7 cents, or 0.08 percent to end at $84.88.

TLT 1 Month Chart

US stocks closed sharply lower Thursday as markets grew apprehensive over another round of monetary stimulus ahead of Friday’s speech by Fed Chairman Ben Bernanke.  The Dow Jones Industrial Average (DJIA) shed 106.77 points, or 0.8 percent, to close at 13,000.71, after sinking below the 13k mark in the day’s trade for the first time in four weeks. The breadth within the 30-stock Dow turned overwhelmingly negative with losers outpacing gainers 28-to-2. Intel Corp (INTC), Caterpillar (CAT) and Cisco (CSCO) were among the biggest percentage decliners.

Dow Jones Industrial Average

The S&P 500 Index (SPX) fell 11.01 points, or 0.8 percent, to 1399.48, closing below the 1400 mark for the first time in four weeks. Technology paced the decliners among it 10 business groups.

Sears Holding Corp (SHLD) crashed 7.92 percent after S&P said it would replace the retailer with LyondellBasell Industries (LYB) in its index. LyondellBasell jumped nearly four percent.
The NASDAQ Composite index (COMP) slipped 32.48 points, or 1.1 percent, to close at 3048.71.
For every stock rising, nearly three declined on the NYSE.
Oil prices for October delivery gained 94 cents to close at $94.62 a barrel.
Gold futures for December delivery shed $5.90 to $1,657.10 an ounce.  

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