Treasury yields jump to five-week high, Stocks lose steam

(Bond Market Recap for August 8th, 2012) The benchmark 10-year Treasury yield hit a five-week high despite dropping earlier on haven demand as German industrial production drop, Spanish and Italian ratings cut and lower UK growth forecasts heightened concerns of worsening sovereign debt-crisis.

The benchmark 10-year Treasury yield rose 1 basis point, or 0.01 percentage point, to 1.64 percent as a US 10-year note auction drew the least demand in three years. The bid-to-cover ratio, a gauge of demand strength, was calculated at 2.49 compared to a previous 10-sale average of 3.1. Yield on 30-year treasury bonds rose two basis points 2.74 percent in late afternoon trading, New York time.

10 Year Treasury Note – 1 Month Chart

Bond funds were also down on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) shedding 67 cents, or 0.53 percent, to $125.16, while the Vanguard Total Bond Market ETF (BND) lost 2 cents, or 0.02 percent to settle at $84.63.

TLT 1 Month Chart

US stocks paused Wednesday as investors took a breather after three consecutive days of bull-run even as the Dow industrials and S&P 500 managed to stay in the green while Wall Street turned cautious.  The Dow Jones Industrial Average (DJIA) edged up 7.04 points, or less than 0.1 percent, to 13,175.33, led by PC maker Hewlett-Packard (HPQ). Within the Dow, 19 of the 30 components closed higher with Walt Disney (DIS), Alcoa (AA) and Wal-Mart (WMT) emerging the biggest percentage gainers.   Fast food giant McDonald’s Corp (MCD) slipped 1.66 percent after its same-store sales over the past 13 months dropped 0.1 percent.

Dow Jones Industrial Average 1 Month Chart

The S&P 500 Index (SPX) rose 1 point to 1402.22 with consumer discretionary the worst performing and consumer staples the best among the index’s 10 business groups.  Department chain Macy’s rose 2.7 percent after it hiked 2012 guidance and reported higher-than-estimated Q2 earnings.   The NASDAQ Composite (COMP) bucked Wednesday’s trend, slipping 4.61 points to close at 3011.25.

  • Advancers managed to stay ahead of decliners on the NYSE.
  • Oil prices for September delivery dropped 23 cents to end at $93.44 a barrel.
  • Gold futures for August delivery rose $3.20 to $1,616 an ounce.
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