(Bond Market Wrapup for October 16th, 2012) – Treasuries retreated as yields on the benchmark 10-year notes rose the most in more than a week after Germany indicated rolling back of resistance to a full fledged bailout for Spain. German Finance Minister Wolfgang Schaeuble had warned Spain over seeking a bailout on top of its bank bailout last month. Two lawmakers from Angela Merkel’s Christian Democratic Party indicated Berlin is open to Madrid seeking a precautionary credit line from the European Stability Mechanism, reducing the haven appeal of US debt.
Sentiments were boosted further after a Federal Reserve report showed output at mines, utilities and factories rose 0.4 percent in September, reversing a 1.4 percent decline in August. Consumer Price Index however rose 0.6 percent in September, beating the average 0.5 percent economists at Briefing.com had projected.
Yield on the benchmark-10-year Treasury notes climbed five basis points, or 0.05 percentage points, to 1.72 percent while 30-year Treasury bond yields rose seven basis points, or 0.07 percentage points, to 2.92 percent.
Bond funds declined with the iShares Barclays 20 Year Treasury Bond ETF (TLT) losing 17 cents, or 0.20 percent, to finish at $84.80 while the Vanguard Total Bond Market ETF (BND) shed $1.71, or 1.38 percent to end at $121.98.
US stocks turned higher Wednesday with the S&P 500 posting its biggest one-day gain in a month following data showing a rebound in industrial activity in September and a bunch of better-than-estimated earnings report.
The Dow Jones Industrial Average (DJIA) zoomed 127.55 points, or 1.0 percent, to finish at 13,551.78, the largest single-day gain since the Federal Reserve announced its third round of quantitative easing. Breadth within the 30-stock index turned positive as the blue-chip index marked its third straight session of gains with winners outpacing gainers 24 to 6.
Intel Corp (INTC) was the biggest gainer in the Dow, rallying 2.9 percent before markets closed. The chipmaker posted third quarter results after markets closed, reporting a drop in revenue. Technology behemoth IBM (IBM) also reported lower revenues after markets closed Tuesday.
Dow components Johnson & Johnson (JNJ) and UnitedHealth Group (UNH) also surged on robust earnings report ahead of Tuesday’s opening bell. JNJ added 1.38 percent after the healthcare conglomerate raised per-share earnings estimate for the year.
The S&P 500 Index (SPX) gained 14.79 points, or 1 percent, to 1454.92 with materials and energy pacing the gainers among its 10 business groups.
The NASDAQ Composite (COMP) rose 36.99 points, or 1.2 percent, to close at 3101.17 with the tech-laden oversized component Apple Inc (AAPL) rising 2.4 percent on speculations over the imminent launch of its iPad mini.
For every stock declining, three advanced on the NYSE.
Oil prices for November delivery gained 24 cents to close at $92.09 a barrel.
Gold futures for December delivery rose $8.70 to $1,749.20 an ounce.