Treasuries advance amid Fed speculation; Stocks fall

(Bond Market Recap for August 28th, 2012) The yield on 10-year benchmark Treasuries fell to the lowest in almost three weeks as speculation the Federal Reserve will start a third round of asset purchases intensified.

Treasuries rose for the second day, pushing yields down as a report published Tuesday showed the Conference Board consumer confidence index tumbled in August, posting the worst reading since Nov. However, the S&P/Case-Shiller 20-city home price index that covers about 80 percent of the US housing market showed a 6.9 percent gain in Q2. Analysts had expected 0.3 percent decline. Yield on the benchmark ten-year Treasury notes dropped two basis points, or 0.02 percentage points, to 1.64 percent in late afternoon trading, New York time. Yield on 30-year Treasury bonds also declined two basis points to 2.74 percent.

10 Year Treasury Yield – 1 Month Chart

Bond Funds were up on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) adding 30 cents, or 0.24 percent, to end at $125.84 while the Vanguard Total Bond Market ETF (BND) gained 3 cents, or 0.04 percent to close at $84.88.

TLT 1 Month Chart

US blue-chip stocks fell for the second straight day in the week while the NASDAQ composite rose slightly as investors weighed a better-than-expected housing data ahead of a key speech by the chairman of the Federal Reserve later this week.  The Dow Jones Industrial Average (DJIA) shed 21.68 points, or 0.2 percent, to 13,102.99, ranging less than 70 points on a dull trading day. Breadth within the Dow turned negative with 19 of the blue-chip index’s 30 stocks closing lower, led by Caterpillar (CAT), Hewlett-Packard (HP) and Cisco (CSCO). Intel Corp (INTC) and Chevron were among the biggest percentage gainers.

Dow Jones Industrial Average 1 Month Chart

The S&P 500 Index (SPX) lost 1.14 points, or 0.1 percent, to close at 1409.30 with telecommunications lagging the most and energy and consumer non-cyclicals leading the day’s biggest percentage gainers.  The NASDAQ Composite (COMP) added 3.95 points, or 0.1 percent, to close at 3077.14, extending Monday’s 3.4 points rise.   Printer maker Lexmark Inc (LXK) surged 14 percent after the company said it will shut its factory in Philippines, lay off 1700 staffs and will fully exit the consumer inkjet business to focus on the more profitable software and imaging businesses.

  • For every three stocks declining, four gained on the NYSE.
  • Oil prices for October delivery rose 0.9 percent to $96.33 a barrel.
  • Gold futures for December delivery fell $6.10 to $1,669.50 an ounce.
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