(Bond Market Update for May 24th, 2012) Today’s $29 billion seven-year Treasury auction drew record low yields of 1.203 percent, beating the previous low of 1.347 percent set at the April 26 auction, as continued crisis in Europe boosted demand for US safe haven assets. The bid to cover ratio, which is the number of bids that were placed in the auction for every 1 that was accepted, fell slightly to 2.80 vs. an average of 2.85 in the last 4 auctions.
The benchmark 10-year yield rose today however after William Dudley, the President of Federal Reserve Bank of New York, said no further monetary stimulus may be required immediately. The 10-year yield rose 3 basis points to 1.77 percent
10 Year Yield 1 Month Chart
Bond Funds were down on the day with the iShares Barclays 20-Year Treasury Bond ETF (TLT) losing 47 cents, or 0.38 percent, to finish at $122.94, while the Vanguard Total Bond Market ETF (BND) shed 9 cents, or 0.11 percent to close at $83.93.
TLT One Month Chart
US stocks finished mixed Thursday, with the broad market recouping early losses in late trading as investors remained on the edge over the ongoing European debt crisis and the risk of Greece exiting the single-currency union. Sentiments were boosted after Italian Prime Minister Mario Monti said the single-currency union may soon issue euro bonds and he believed that Greece will remain in the eurozone.
The Dow Jones Industrial Average (DJIA) climbed 33.60 points, or 0.3 percent, to 12,529.75, with the Dow component Hewlett Packard (HPQ) leading the winner’s list, gaining 3.27 percent on the day.
Dow Jones Industrial Average 1 Month Chart
HP stock jumped after the company announced plans to lay-off 27,000 jobs globally and reported revenue and sales that beat estimates. Among the 30 components of Dow, 21 stocks closed higher, including Home Depot (HD) and Coca Cola (KO).
The S&P 500 Index (SPX) rose 1.82 points, or 0.1 percent, to 1320.68 with technology performing the worst and consumer staples faring the best among the index’s 10 business groups.
The NASDAQ Composite Index (COMP) slipped 10.74 points, or 0.4 percent, to close at 2839.38. data storage company NetApp Inc (NTAP) dropped the hardest, losing 12 percent after quarterly earnings fell short of expectations. F5 Networks sank 7.88 percent to close at $108.56 for the day.
Advancers outpaced decliners by 3-to-2 on the NYSE.
Oil prices for July delivery gained 70 cents to close at $90.66 a barrel.
Gold futures for June delivery rose $9.10 to $1,557.50 an ounce.