Treasuries Fall Amid Europe Bailout Speculations, Stocks End Mixed

(Bond Market Wrapup for July 25th, 2012) Treasuries snapped a three-day winning spree as demand for safe-haven assets eased amid speculations that the European leaders will enhance the firepower of the region’s bailout fund.

Treasuries declined, paring gains from three previous sessions amid talks the European permanent bailout fund may be granted a banking license.  The yield on 10-year Treasury notes climbed one basis point to 1.40 percent in late afternoon trading, New York time. A banking license to the European Stability Mechanism will allow the fund to access ECB lending, giving it sufficient firepower in case Spain or Italy needed full-blown bailouts. Yield on 30-year treasury bonds remained flat at 2.45 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 34 cents, or 0.26 percent, to end at $132.16, while the Vanguard Total Bond Market ETF (BND) gained 6 cents, or 0.07 percent to finish at $85.36.

TLT 1 Month Chart 

US stocks finished mixed Wednesday with the Dow Industrials lifted by Caterpillar and Boeing while the S&P 500 dropped for the fourth straight day and the NASDAQ stumbled on a rare earnings-miss from Apple. The Dow Jones Industrial Average (DJIA) closed 58.73 points, or 0.5 percent, to 12,676.05 higher, boosted by solid results from Boeing (BA) and Caterpillar (CAT). 19 stocks within the 30-component blue-chip index closed higher with Microsoft (MSFT), Hewlett Packard (HPQ) and Kraft Foods (KFT) leading the day’s biggest percentage decliners.

Dow Jones Industrial Average 1 Month Chart

The S&P 500 Index (SPX) finished fractionally lower at 1337.89 with telecommunications outperforming others. Technology stocks dropped the most among its 10 business groups.  The tech-heavy NASDAQ Composite (COMP) tumbled 8.75 points, or 0.3 percent, to close at 2854.24 after its biggest component Apple Inc (AAPL) lost more than 4 percent on a rare-earnings miss. Chipmaker Altera Corp (ALTR) soared more than 12 percent after the firm’s Q2 profits beat street expectations.

  • Winners and decliners were evenly matched on the NYSE with eight stocks advancing for every seven stocks that declined.
  • Oil prices for September delivery gained 50 cents to $89 a barrel.
  • Gold futures for August delivery rose $27.40 to $1,603.60 an ounce.
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