Treasuries Fall on Stimulus Speculation, Stocks Gain

(Bond Market Recap for July 19th, 2012) Treasuries retreated after softer-than-anticipated economic data strengthened investor belief that the recovery is stalling, heightening speculations that the Federal Reserve will initiate another round of asset purchases.

Yield on 10-year benchmark notes bounced off near-record lows as jobless claims rose more than forecasted, existing home sales dropped and a gauge of leading indicators sank. The 10-year treasury yield rose two basis points to 1.51 percent while yield on 30-year treasury bonds rose three basis points to 2.61 percent in late afternoon trading, New York time.

10 Year Treasury Yield – 1 Month Chart 

Bond Funds were also down on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) shed 33 cents, or 0.26 percent, to end at $128.49 while the Vanguard Total Bond Market ETF (BND) dropped 2 cents, or 0.02 percent to end at $85.

TLT 1 Month Chart

US stocks extended their winning streak, closing higher for the third straight day as stronger-than-expected corporate results lifted investor sentiment in an otherwise gloomy day weighed down by disappointing economic data. Investor sentiments got some boost after Germany’s Bundestag approved €100 billion bailout money for recapitalizing Spain’s stricken banks.  The Dow Jones Industrial Average (DJIA) rose 34.66 points, or 0.3 percent, to finish at 12,943.36. The broad market breadth remained neutral with 15 of the 30 stocks within the blue-chip index ending in the green zone.  International Business Machine (IBM) led the day’s top percentage gainers, adding 3.8 percent after the tech giant beat market estimates and raised outlook for 2012.

Dow Jones Industrial Average 1 Month Chart

The S&P 500 Index (SPX) gained 3.73 points, or 0.3 percent, to 1376.51 with tech fronting the day’s gainers and financials and telecom hitting the ground hardest among its 10 business group. eBay Inc. (EBAY) vaulted 8.6 percent after the online retailer more-than-doubled its quarterly earnings due to strong revenue growth in PayPal division.  On the other hand, banking giant Morgan Stanley (MS) lost 5.29 percent after second quarter profits crashed more than 50 percent.  The tech-heavy NASDAQ Composite (COMP) added 23 points, or 0.79 percent, to close at 2966.

  • Advancers stayed ahead of decliners on the NYSE.
  • Oil prices for August delivery gained $2.79 to close at $92.66 a barrel.
  • Gold futures for August delivery rose $9.60 to $1,580.04 an ounce.
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