5-year Treasury Yield Hits Record Low, Stock Fall

July 20th, 2012 by

(Bond Market Wrapup for July 20th, 2012) Investors scurried for safe haven assets pushing US Treasury five-year yields to record lows as Spain  continued securing bailout money for its stricken banks.

The yield on US 10-year notes also traded near record lows as investors grew worried over reports that Spain’s Valencia region is preparing for a rescue package from Madrid even as EU finance ministers approved the first tranche of €30 billion bailout-money for the country’s struggling lenders. The benchmark 10-year US Treasury yield dropped five basis points to 1.46 percent while yield on 30-year treasury bonds fell six basis points to 2.55 percent in late afternoon trading, New York time.

10 Year Treasury Yield – 1 Month Chart 

Bond funds were also up on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) climbing $1.57, or 1.22 percent, to close at $130.06 while the Vanguard Total Bond Market ETF (BND) gained 16 cents, or 0.19 percent, to settle at $85.16 for the week.

TLT 1 Month Chart 

US stocks closed lower Friday snapping its three-day winning streak as a mixed bag of corporate results and record high 10-year borrowing costs prompted investors to take some money off the table.  The Dow Jones Industrial Average (DJIA) tumbled 120.79 points, or 0.9 percent, to 12,822.57, up 0.4 percent for the week but off 0.5 percent for July. Within the Dow, 23 of the 30 components slumped.

Intel (INTC), Bank of America (BAC) and McDonald’s were the biggest percentage decliners while General Electric (GE) and Chevron (CVX) led the day’s winners.

 Dow Jones Industrial Average 1 Month Chart

The S&P 500 Index (SPX) shed 13.85 points, or 1 percent, to finish the week at 1362.66, up 0.4 percent for the week and higher less than 0.1 percent for the month.  SanDisk (SNDK) led the day’s gainers; vaulting 10 percent on better-than-expected results while Chipotle Mexican Grill Inc (CMG) crashed more than 21 percent after sales growth in the second quarter slowed down to the lowest since early 2010.
The NASDAQ Composite Index (COMP) lost 40.6 points, or 1.4 percent, to close at 2925.30, up 0.6 percent for the week, but down 0.3 percent for the month.

  • For every two stocks declining, one advanced on the NYSE.
  • Oil prices for August delivery slipped $1.22 to close at $91.44 a barrel.
  • Gold futures for August delivery rose $2.40 to $1,582.80 an ounce.
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