Treasuries snap three day winning streak as Fed sees gradual expansion; Stocks up

(Bond market recap for August 29th, 2012) Treasuries fell for the first time in three days after reports released early on the day showed the US economy expanded more than previously estimated in the second quarter while a report from the National Association of Realtors showed pending home sales at their highest level in two years. The revised GDP data, though coming at better-than-expected at 1.7 percent, was still weak.

The benchmark 10-year Treasury note yield rose two basis points, or 0.02 percentage point, to 1.65 percent while yield on 30-year treasury bonds gained two basis points as well to 2.77 percent in late afternoon trade, 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) lost 55 cents, or 0.44 percent, to close at $125.29 while the Vanguard Total Bond Market ETF (BND) shed 7 cents, or 0.08 percent to finish at $84.81.

TLT 1 Month Chart

US stocks finished marginally higher Wednesday after the Fed’s Beige Book showed gradual expansion of the economy across 12 districts. Stocks remained range-bound most of the day after the release of reports on pending home sales and US GDP growth early on.
The Dow Jones Industrial Average (DJIA) finished 4.49 points, or 0.1 percent, higher at 13,107.48, after trading in a 64 points range. Within the Dow, the breadth turned negative with 19 of 30 stocks closing lower. Led by Verizon Communications Inc (VZ), the blue-chip index snapped a three-day losing streak as Dow component Caterpillar Inc (CAT) erased early losses after competitor Joy Global (JOY) lowered 2012 revenue and earnings forecast.

Dow Jones Industrial Average – 1 Month Chart


Reversing a three-day losing streak, the S&P 500 Index (SPX) rose 1.19 points, or 0.1 percent, to 1410.49 with telecommunications outperforming energy lagging among its 10 business groups. Following the resignation of CEO and Chairman Angela Braly, insurer WellPoint Inc jumped 7.68 percent.Sealed Air Corp (SEE) vaulted more than 12 percent after the firm announced a new CEO and succession plan.

  • The NASDAQ Composite (COMP) rose 4.05 points, or 0.1 percent, to close at 3081.19, its fourth straight day of gains.
  • For every three stocks advancing, two declined on the NYSE.
  • Oil futures for October delivery slipped 84 cents or 0.09 percent, to close at $95.49 a barrel.
  • Gold futures for December delivery dropped $6.70 to $1,663.00 an ounce.
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