(Bond Market Recap for August 17th, 2012) Treasuries reversed a 4-day losing streak even though govt. securities headed for a fourth straight week of losses after Friday’s consumer confidence data showed improvement following similar trends in retail sales, building permits, industrial production and jobs earlier. Analysts say the so-called Convexity-hedging by holders of MBS may be behind the decline.
Treasuries made a come-back after four sessions when yields on 10-year notes hit 1.86 percent yesterday. The yield on the benchmark 10-year Treasuries dropped two basis points, or 0.02 percentage points, to 1.81 percent in late afternoon trading, New York time. 30-year Treasury bond yields fell 3 basis points to 2.93 percent even though the Michigan University Thomson Reuters consumer sentiment index rose to 73.6 in August from 72.3 in July. A separate report by Conference Board said its leading economic indicators rose 0.4 percent in July.
10 Year Treasury Yield 1 Month Chart
Bond funds were up on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) rising 59 cents, or 0.49 percent, to $121.60 while the Vanguard Total Bond Market ETF (BND) gained 14 cents, or 0.17 percent to $84.23.
TLT 1 Month Chart
US stocks closed higher Friday with the broad market capping off gains for the sixth straight week after economic data showed consumer sentiments improved in August. The Dow Jones Industrial Average (DJIA) climbed 25.09 points, or 0.2 percent, to 13,275.20, led by Caterpillar Co (CAT), Travelers Co (TRV) and United Technologies (UTX). Within the Dow, the breadth turned negative however with 13 of the 30 components ending in the positive territory. The blue-chip index closed 0.5 percent higher for the week, its sixth consecutive week of gains. Intel (INTC) and Merck (MRK) closed were among the day’s biggest decliners.
Dow Jones Industrial Average 1 Month Chart
The S&P 500 Index (SPX) rose 2.65 points, or 0.2 percent, to 1418.16 with the financials and tech advancing the most among its 10 business groups. Up 0.9 percent for the week, this is the index’s sixth straight week of gains, the longest since Jan 2011. The tech-heavy NASDAQ Composite (COMP) added 14.20 points, or 0.5 percent, to close at 3076.59, up 1.8 percent for the week and fifth week of gains in a row.
- Advancers pulled ahead of decliners 3-to-2 on the NYSE.
- Oil prices for September delivery gained 41 cents to close at $96.01 a barrel.
- Gold futures for April delivery rose $2 to finish the week at $1,619.40 an ounce.