Treasuries rise amid fiscal cliff, Mideast tension, US stocks plummet

(Bond Market Wrapup for November 14th, 2012) – Treasuries edged up slightly, extending gains for the fifth straight day after minutes from the Federal Reserve’s latest monetary policy meeting showed the central bank would continue to expand its balance-sheet once its so-called Operation Twist program ends.

Before meeting top CEOs in the White House today, President Obama said he believes the fiscal cliff is solvable, but reiterated his reluctance to extend Bush-era tax cuts for rich Americans. The burden on balancing the national budget should not fall on the middle-class, he added. Investors were also worried about fresh violence in the Gaza strip where Israeli airstrikes killed a Hamas military leader; fostering the view that oil-supply will be dented.

The benchmark 10-year Treasury yield was little changed at 1.59 percent while 30-year Treasury bond yields fell one basis point, or 0.01 percentage point, to 2.72 percent in late afternoon trade, New York time.

Bond funds performed mixed with the iShares Barclays 20 Year Treasury Bond ETF (TLT) adding 12 cents, or 0.09 percent, to close at $126.73, while the Vanguard Total Bond Market ETF (BND) shed 2 cents, or 0.02 percent, to end at $85.00.

US stocks extended losses Wednesday with the Dow Industrials slipping to its lowest since June as worries about the fiscal cliff and conflict in the Gaza strip wiped out a tech-driven early rally.

The Dow Jones Industrial Average (DJIA) slipped 185.23 points, or 1.5 percent, to 12,570.95, its lowest since late June after three straight session of losses. All the 30-components but one of the blue-chip index finished lower for the day as breadth turned overly negative. Computer networking-equipment maker Cisco Systems Inc virtually surprised everybody by handily beating both top-line and bottom-line estimates.

The S&P 500 Index (SPX) tumbled 19.04 points, or 1.4 percent, to 1355.49 with industrials logging the steepest fall. The S&P 500 is now down 7.5 percent from its almost five-year high on September 14 and has shed more than 5 percent since President Barack Obama’s reelection of November 6.

The tech-heavy NASDAQ Composite Index (COMP) fell 37.08 points, or 1.3 percent, to close at 2846.81, its lowest in five months. The index is now down more than 10 percent from this year’s high in September, putting it in the correction territory.

For every stock rising, more than eight declined on the NYSE.

Oil prices for December delivery gained 94 cents to close at $86.32 a barrel.

Gold futures for December delivery rose $5.30 to $1,730.10 an ounce.

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