Treasuries change little as Europe overshadows stimulus bets, US stocks fall

(Bond Market Wrapup for September 10th, 2012) Treasuries moved up Monday, pushing yields lower as markets turned relatively calm ahead of the German constitutional court’s ruling on the validity of the EUR 500 billion permanent rescue fund Wednesday and the US fed FOMC later this week.

Treasuries advanced marginally after media reports quoted Spanish Prime Minister Mariano Rajoy as saying he hasn’t decided on seeking intervention by the European Central Bank. The benchmark 10-year Treasury yield dropped two basis points, or 0.02 percentage points, to 1.66 percent while yield on 30-year Treasury bonds slid one basis point to 2.81 in later afternoon trading, New York time.

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 close at $124.33, while the Vanguard Total Bond Market ETF (BND) gained 2 cents, or 0.02 percent finish at $84.76.

TLT 1 Month Chart

US stocks fell Monday after hitting multi-year highs Friday as investors turned cautious ahead of the Fed’s policy decision later in the week amid reports Greece’s ruling-coalition has failed to reach an agreement over spending cuts even as the markets await the German high court’s decision on the European Stability Mechanism Wednesday.  Led by Intel Corp (INTC), the Dow Jones Industrial Average (DJIA) lost 52.35 points, or 0.4 percent, to 13,254.29 as the chipmaker slumped 3.8 percent after Morgan Stanley cut the firm’s third quarter revenue and profit outlook.  Within the blue-chip index, the breadth turned negative with decliners outnumbering winners 19-to-11. Hewlett Packard (HPQ), Verizon (VZ) and IBM (IBM) were the notable gainers.

Dow Jones Industrial Average 1 Month Chart

The S&P 500 Index (SPX) fell 8.84 points, or 0.6 percent, to 1429.08 with tech performing the worst and telecommunications the sole gainer among its 10 business groups.  The NASDAQ Composite index (COMP) shed 32.40 points, or 1.03 percent, to close at 3104.02 after the tech-heavy benchmark’s biggest component Apple Inc (AAPL) finished 2.6 percent lower.

  • Decliners stayed ahead of advancers on the NYSE.
  • Oil prices for October delivery slipped 12 cents to close at $96.54 a barrel.
  • Gold futures for December delivery fell $8.70 to $1,731.80 an ounce.
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