Treasury 10-year yield lifted by German court ruling, US stocks cautious ahead of Fed

 

(Bond Market Wrapup for September 12th, 2012)- The yield on the benchmark 10-year Treasury notes rose to a three-week high, pushing prices down  after Germanys top constitutional court backed the ratification of Europe’s permanent bailout fund, prompting investors to move out of safe haven assets.

Treasury bonds retreated for the second day as a gauge for US inflation reached its highest level since March, turning investors away from the government’s auction of benchmark securities. The benchmark 10-year Treasury yield jumped five basis points, or 0.05 percentage points, to 1.76 percent while yield on the 30-year Treasury bonds jumped six basis points to 2.92 percent in late afternoon trading, New York time.

Bond funds retreated for the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) losing $1.54, or 1.25 percent, to finish at $122.01 while the Vanguard Total Bond Market ETF (BND) shed 12 cents, or 0.14 percent to close at $84.53.

US stocks finished modestly higher Wednesday after a German Constitutional Court refused to block a euro-area bailout fund and investors grew hopeful of further monetary stimulus by the Federal Reserve at the conclusion of its two-day policy meeting tomorrow.

The Dow Jones Industrial Average (DJIA) climbed 9.99 points, or 0.08 percent, to 13,333.35, scoring its fifth gain in the past six sessions and marking its highest level since December 2007. Within the 30-stock blue-chip index, the breadth continued to trade positive with winners outpacing losers 18-to-12, led by Verizon (VZ) and General Electric (GE).

Biggest percentage decliners included Boeing (BA), Du Pont (DD) and Bank of America (BAC).

The S&P 500 Index (SPX) rose 3 points, or 0.2 percent, to 1436.56 with pacing the gainers and consumer staples lagging among its 10 business groups.

The NASDAQ Composite (COMP) added 9.78 points, or 0.3 percent, to close at 3114.31 after its biggest component Apple (AAPL) rose 1.4 percent following the unveiling of the iPhone5.

For every stock declining, two advanced on the NYSE.

Oil futures for October delivery slipped 16 cents to close at $97.01 a barrel.

Gold futures for December delivery dropped $1.20 to $1,733.70 an ounce.

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