(Bond Market Wrapup for August 9th, 2012) Treasuries closed mostly lower, pushing yields up amid added evidence of employment gains after Friday’s impressive non-farm payroll number. Data released by the Labor Department showed initial jobless claims dropped unexpectedly by 6,000 to 361,000 in the week ended Aug 4 weakening speculation of another round of assets purchases by the Fed to bolster the economy.
The benchmark 10-year yield rose 5 basis points, or 0.05 percentage points, to 1.69 percent as demand for havens eroded on the back of better-than-expected jobless claims. A US Commerce Department report showed trade deficit in June shrank by 10.7 percent which should boost Q2 gross domestic product. Yield on 30-year treasury bonds was little changed at 2.76 percent in late afternoon trading, 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) shedding 9 cents, or 0.07 percent, to $125.07 while the Vanguard Total Bond Market ETF (BND) lost 5 cents, or 0.06 percent to close at $84.58.
TLT 1 Month Chart
US stocks closed near flat Thursday with the S&P 500 managing to end slightly higher, extending its rally to the fifth consecutive day, its longest winning run since March as US economic data came in stronger than anticipated. Following four up sessions in a row, the Dow Jones Industrial Average (DJIA) shed 10.45 points, or less than 0.1 percent, to 13,165.19. The breadth was evenly balanced with 15 of the Dow’s 30 components closing lower, led by American Express (AXP), AT&T (T) and Walt Disney (DIS). Cisco Systems paced blue-chip gains, rising 3.2 percent after Goldman Sachs added the network gear maker to its conviction buy list.
Dow Jones Industrial Average 1 Month Chart
The S&P 500 Index (SPX) rose fractionally to 1402.80 with energy and natural resources leading the gainers while consumer staples and consumer discretionary lagged among its 10 business groups. The NASDAQ Composite (COMP) emerged the biggest percentage gainer for the second consecutive day, adding 7.39 points, or 0.3 percent, to 3018.64.
- Advancers just pulled ahead of decliners on the NYSE.
- Oil prices for September delivery gained 1 cent to close at $93.36 a barrel.
- Gold futures for December delivery rose $4.20 to $1,620.20 an ounce.