Treasuries Fall on Draghi Euro Pledge, Stocks Surge

 

(Bond Market Recap for July 26th, 2012) Treasuries fell Thursday after the European Central Bank President Mario Draghi pledged to preserve the single currency, damping demand for safe haven assets.  Sentiments were further buoyed after first time jobless-benefit claims fell faster than anticipated while durable goods order rose faster than economists had forecasted. However, the housing market seems to have lost some momentum after the index of pending home resale lost 1.4 percent in June, according to the National Association of Realtors.

Treasuries dropped, pushing yields higher after Draghi’s assurance that the ECB will do what ever it takes to preserve the euro. The benchmark 10-year yield rose three basis points to 1.43 percent while 30-year treasury bond yield rose two basis points to 2.49 percent in late afternoon trading, New York time.

10 Year Treasury Yield – 1 Month Chart

Bond Funds were down on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) fell $1.21, or 0.92 percent, to finish at $130.95, while the Vanguard Total Bond Market ETF (BND) shed 6 cents, or 0.07 percent to finish at $85.30.

TLT 1 Month Chart 

US stocks leapt on hopes of a comprehensive solution to the ongoing sovereign debt crisis after the European Central Bank President Mario Draghi said the central bank will do everything possible within its mandate to save the euro.  The Dow Jones Industrial Average (DJIA) zoomed 211.88 points, or 1.7 percent, to 12,887.93, up 0.5 percent for the week and 5.5 percent year-to-date. Within the blue-chip index, all but-one of the 30 components gained. American Express (AXP), Alcoa (AAA) and 3M (MMM) were among the day’s top gainers. Only Cisco (CSCO) ended in the red.

Dow Jones Industrial Average

Snapping its four-session losing streak, the S&P 500 Index (SPX) added 22.13 points, or 1.7 percent, to finish at 1360.02. Telecommunications gained the most among its 10 business groups after Sprint Nextel soared 20 percent on better customer spending.  The tech-heavy NASDAQ Composite (COMP) rose 39.01 points, or 1.4 percent, to close at 2893.25 with games developer Zynga (ZNGA) plunging 37 percent on weak quarterly results.

  • For every stock declining, three advanced on the NYSE.
  • Oil prices for September delivery gained 43 cents to close at $89.40 a barrel.
  • Gold futures for August delivery rose $7.00 to $1,615.10 an ounce.
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