(Bond Market Wrapup for September 17th, 2012) – US Treasury securities reversed a four-day decline as a New York area factory output gauge slumped to -10.41 in September from -5.85 in August. The reading, known as the Empire State Index, is the lowest since April 2009 and falls far short of economists’ forecast of -2. Any reading below zero indicates contraction.
The benchmark 10-year notes started off on a winning note after European Union finance ministers remained divided on a timetable for a more unified banking sector and failed to build consensus over terms of rescue request and the role of the ECB at its Sep 14 meeting in Cyprus. Citigroup became the latest bank to cut China’s growth forecast, underscoring Bernanke’s concern more stimulus would be required to halt the economy from slowing down further. Yield on 10-year Treasury notes declined four basis points, or 0.04 percentage points, to 1.83 percent while 30-year Treasury bond yield slid six basis points to 3.03 percent in late afternoon trading, New York time.
Bond funds moved higher with the iShares Barclays 20 Year Treasury Bond ETF (TLT) rising $1.42, or 1.20 percent, to $119.72 while the Vanguard Total Bond Market ETF (BND) gained 12 cents, or 0.14 percent over to $84.40.
US stocks ended lower Monday after last week’s “euro-phoria” faded as investors stepped back to gauge the economy’s health following a disappointing New York area manufacturing data.
The Dow Jones Industrial Average (DJIA) fell 40.27 points, or 0.3 percent, to 13,553.10, led by Alcoa (AA) and Bank of America (BAC). Breadth within the 30-component blue-chip index turned negative after a four-day winning streak with decliners outpacing winners 18-to-11. Microsoft (MSFT) finished unchanged.
Winners included drug-makers Pfizer (PFE) and Merck (MRK).
The S&P 500 Index (SPX) slipped 4.58 points, or 0.3 percent, to 1461.19 with financials and natural resources faring the worst and healthcare and telecommunication pacing the gainers among its 10 business groups.
The tech-heavy NASDAQ Composite Index (COMP) shed 5.28 points, or 0.2 percent, to close at 3178.67. Apple Inc (AAPL) added 1.2 percent after the company announced its pre-order of iPhone 5 topped 2 million units a day, breaking all previous records and trading over $700 after hours.
For every stock advancing, more than two declined on the NYSE.
Oil prices for October delivery gained $2.38 to close at $96.62 a barrel.
Gold futures for December delivery fell $2.10 to $1,770.60 an ounce.