(Bond Market Wrapup for May 15th, 2012) US Treasury prices traded to near seven-month highs, softening little as the European economy remained flat in the last quarter, beating a downturn forecast. However, after Greek negotiations to form a government failed, demand for safe assets spiked. While US consumer prices remained flat, retail sales grew by 0.1 percent in April. The New York Federal Reserve Bank report showed manufacturing made a strong come back in May, recouping last month’s unexpected decline.
Demand for US debts softened earlier after a report from the region showed Germany expanded by 0.5 percent beating estimates while Europe managed to avoid a recession. The benchmark 10-year Treasury yield rose two basis points to 1.78 percent, after touching 1.81 percent in the day’s trade.
Bond Funds were up as well with the iShares Barclays 20 Year Treasury Bond ETF (TLT) jumped 49 cents, or 0.40 percent, to $121.66, while the Vanguard Total Bond Market ETF (BND) gained 2 cents, or 0.02 percent, to close at $84.12.
US stocks declined Tuesday to touch three month lows with the Dow ending near its four month low reading as worries from the euro-land kept investors worried despite some good domestic economic numbers.
The Dow Jones Industrial Average (DJIA) lost 63.35 points, or 0.5 percent, to 12,632, its ninth session of losses out of the last 10. Home improvement retailer Home Depot Inc (HD) dropped 2.43 percent after the Atlanta-based company missed Q1 revenue and margin estimates, though profits soared by 28 percent. JP Morgan Chase rose 1.26 percent after CEO Jamie Dimon said the $2 billion trading loss is unlikely to impact the bank’s dividend plans.
The S&P 500 Index (SPX) rose 7.69 points, or 0.6 percent, to settle at 1330.66. Off-price retailer TJX Cos (TJX) jumped 6.93 percent after the retailer beat street earnings estimates and also upgraded 2012 outlook.
The tech-heavy NASDAQ Composite Index (COMP) dropped 8.82 points, or 0.3 percent, to close at 2893.76, the least since Feb 2. Selling pressure picked up during the final hour of trade after Greek President Karolos Papoulias’ office announced fresh election in June, boosting the flight-to-quality bid.
For every stock advancing, nearly two stocks declined on the NYSE.
Oil prices for June delivery slipped 80 cents to close at $93.98 a barrel.
Gold futures for June delivery shed $3.90 to settle at $1,557.10 an ounce.