Treasuries fall as Bernanke keeps QE3 option open, Stocks Up

(Bond Market Wrapup for July 17th, 2012) Bonds bounced from close to record lows after Bernanke appeared for his half-yearly testimony before the senate committee on banking.

Demand for US assets eased after Bernanke said the Fed may consider purchasing mortgage-backed securities or reduce interest on bank reserves or change its communication on interest rate outlook. The yield on benchmark 10-year Treasuries gained two basis points to 1.50 percent after fluctuating in early trade. 30-year Treasury bond yields rose three basis points, or 0.03 percentage point, to 2.59 percent in late afternoon trading, New York time.

10 Year Treasury Yield – 1 Month Chart

Bond funds were also down on the day as the iShares Barclays 20 Year Treasury Bond ETF (TLT) lost $1.02 points, or 0.79 percent, to settle at $128.75, while the Vanguard Total Bond Market ETF (BND) shed 3 cents, or 0.04 percent to finish at $84.88.

TLT 1 Month Chart 

US stocks rallied Monday as investors turned their focus on positive earnings news and consensus beating economic reports even though Fed Chairman Ben Bernanke refused to given any hint of an imminent monetary stimulus round.  The Dow Jones Industrial Average (DJIA) wavered wildly, rising as much as 102 points after sliding 82 points in early trade and settling 78.33 points, or 0.6 percent, higher at 12,805.54. Within the blue-chip index, 26 of the 30 components closed higher, led by Walt Disney (DIS) after BofA upgraded the entertainment conglomerate to ‘buy’ from ‘neutral’.  Beverage giant Coca-Cola (KO) rose 1.6 percent after the company reported higher-than-estimated profits for the quarter. Merck (MRK) and Pfizer (PFE) were the other biggest percentage gainers.

Dow Jones Industrial Average 1 Month Chart

The S&P 500 Index (SPX) added 10.03 points, or 0.7 percent, to 1363.67 with telecommunications, health-care and natural resources fronting the gainers among its 10 business sectors.  Toy maker Mattel Inc (MAT) vaulted 9.7 percent after the firm beat Q2 earnings estimates by a wide margin.

  • The NASDAQ Composite Index (COMP) rose 13.10 points, or 0.5 percent, to settle at 2910.04.
  • For every stock five stocks declining, eight advanced on the NYSE.
  • Oil prices for August delivery gained 79 cents to close at $89.22 a barrel.
  • Gold futures for August delivery slipped $2.10 to $1,589.50 an ounce.
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