Treasuries advance as retail sales disappoint, US stocks end lower

(Bond Market Wrapup for July 16th, 2012) Five-year US Treasury yields dropped to a record low of 0.60 percent during intraday trading as investors ran for refuge in government debts after data showed retails sales in June fell 0.5 percent.  Worries over the European debt crisis also pulled down yields of UK, Germany, Canada, France and the Netherlands to record lows.  However, US yields may rise if Fed Chairman Bernanke calls for more stimulus measures when he appears before the Senate Banking Committee tomorrow.

The benchmark 10-year Treasury yield dropped two basis points over Friday’s close to 1.47 percent in late afternoon trading. Yields had dropped to 1.4403 in intraday trading, close to the record low of 1.4387, set on June. Yield on 30-year treasury bonds declined two basis points to 2.55 percent in late afternoon trading after touching 2.52.

10 Year Treasury Yield – 1 Month Chart

Bond Funds were also up on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) climbing 5 cents, or 0.06 percent, to $84.91, while the Vanguard Total Bond Market ETF (BND) gained 60 cents, or 0.46 percent to finish at $129.77.

TLT 1 Month Chart

US stocks ended lower Monday as an unexpected drop in retail sales for the third straight month raised concerns about the health of the economy and pushed two of the three indexes down for the seventh in eighth sessions. The Dow Jones Industrial Average (DJIA) lost 49.88 points, or 0.4 percent, to 12,727.21, with 23 of the 30 components within the blue-chip index closing lower.  Caterpillar (CAT), Alcoa (AA) and Coca-Cola (KO) were the day’s biggest decliners.  Pfizer (PFE) and Chevron (CVX) both finished in the positive territory while American Express (AXP) gained 1.2 percent ahead of its quarterly result on Wednesday.

Dow Jones Industrial Average 1 Month Chart

The S&P 500 Index (SPX) shed 3.14 points, or 0.2 percent, to 1353.64 with consumer discretionary and industrials hitting the ground hardest. Energy rose the most among its 10 business groups.  The tech-heavy NASDAQ Composite Index (COMP) dropped 11.53 points, or 0.4 percent, to close at 2896.94.

  • For every stock eight stocks declining, seven advanced on the NYSE.
  • Oil prices for August delivery gained $1.33 to close at $88.43 a barrel.
  • Gold futures for August delivery shed 40 cents to $1,591.60 an ounce.
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