Treasuries Tank on Europe hope, Stocks Up Big

 

(Bond Market Recap for July 27th, 2012) The benchmark 10-year Treasury yield climbed the most in four months amid speculation European leaders will take measures to contain the region’s sovereign debt crisis, easing demand for safe haven assets.

The 10-year Treasury yield leapt 12 basis points, or 0.12 percentage point, to 1.55 percent after US Q2 GDP number came in at 1.5 percent, beating economists’ estimate of 1.4 percent. 30-year treasury bond’s yield vaulted 15 basis points, or 0.15 percentage point, to 2.64 percent in late afternoon trading, New York time as risky assets were back in favor following French media reports the ECB is preparing to buy sovereign bonds from the secondary markets.

10 Year Treasury Yield 1 Month Chart

 

Bond Funds were down as the iShares Barclays 20 Year Treasury Bond ETF (TLT) fell 2.47 points, or 1.89 percent, to close at $128.48, while the Vanguard Total Bond Market ETF (BND) lost 32 cents, or 0.38 percent to end the week at $84.98.

TLT 1 Month Chart

US stocks surged for the second day Friday to end the week higher on hopes the European Central bank and the US Federal Reserve will take steps put the economy on a growth path.  The Dow Jones Industrial Average (DJIA) rallied 187.73 points, or 1.5 percent, to 13,075.66, its first close above the psychologically important 13,000 level since May 7 and up 1.97 percent for the week. All the 30 components of the blue-chip index closed higher with pharmaceutical giant Merck (MRK) leading the day’s percentage gainers. Other top gainers included Alcoa (AA), JP Morgan Chase (JPM) and Caterpillar (CAT).

Dow Jones Industrial Average 1 Month Chart


The S&P 500 Index (SPX) rose 25.95 points, or 1.9 percent, to 1385.97, up 1.71 percent on the week. All the 10 major industry groups gained, led by healthcare and technology. The index has added 10.21 percent year-to-date.
The NASDAQ Composite (COMP) jumped 64.84 points, or 2.2 percent, to close at 2958.09, up 1.1 percent for the week. Facebook (FB) tumbled 12 percent after the social network site’s Q2 ad revenues grew slower than estimated.

  • For every stock declining, five advanced on the NYSE.
  • Oil prices for September delivery gained 70 cents to close at $90.09 a barrel.
  • Gold futures for August delivery rose $2.90 to $1,618 an ounce.
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