Drop in Retail Sales Drives Treasury Yields Lower, Stocks Fall

(Bond Market Wrapup for June 13th, 2012) Treasuries climbed to erase yesterday’s loss as a drop in retail sales spiked the demand for safe-haven assets. Increasing withdrawals at Greek banks also increased market worries.

Treasury Bonds advanced after a Commerce Department report showed retail sales dropped 0.2 percent in May. The Producer Price Index, a barometer of wholesale prices, dropped 1 percent, greater than the 0.7 percent forecast by economists. The yield on the benchmark 10-year Treasuries dropped six basis points, 0.06 percentage points, to 1.61 percent in late afternoon trade. Yield on 30-year bonds declined five basis points to end at 2.72 percent despite gaining five basis points in early trade.

10 Year Treasury Yield 1 Month Chart


Bond Funds were also up on the day with the the iShares Barclays 20 Year Treasury Bond ETF (TLT) added $1.23, or 0.99 percent, to settle at $125.86 while the Vanguard Total Bond Market ETF (BND) gained 18 cents, or 0.21 percent to end at $84.28.

TLT 1 Month Chart

US stocks finished lower Wednesday as investors remained jittery ahead of Greek elections on Sunday. Markets were spooked after ratings agency Egan-Jones downgraded Spain’s sovereign ratings to junk.  The Dow Jones Industrial Average (DJIA) dropped 77.42 points, or 0.6 percent, to 12,496.38, with American Express (AXP) dropping the hardest. The decliners included Caterpillar (CAT), DuPont (DD) and Home Depot (HD) as 20 of the 30 components closed lower within the Dow. JP Morgan Chase (JPM) led the list of blue-chip gainers even as CEO Jamie Dimon testified before the Senate Committee on Banking.

Dow Jones Industrial Average 1 Month Chart

 

The S&P 500 Index (SPX) slipped 9.30 points, or 0.7 percent, to 1314.88 with consumer discretionary faring the worst among the index’s 10 business groups.  The NASDAQ Composite (COMP) tumbled 24.46 points, or 0.9 percent, to close at 2818.61. PC maker Dell (DELL) jumped 2.6 percent after it announced an 8-cent a share quarterly dividend.

For every stock rising, two stocks declined on the NYSE.

Oil prices for July delivery shed 70 cents to close at $82.62 a barrel.

Gold futures for August delivery rose $5.60 to finish at $1,619.40 an ounce.

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