(Bond Market Wrapup for August 3rd, 2012) Treasuries retreated the most in a week after a latest report showed the US economy created more jobs in July than forecasted, indicating a gradual healing of the economy and tempering speculations of another round of asset purchases by the Federal Reserve. The economy added 163,000 jobs in July, a massive improvement over 63,000 jobs that were added in June.
Treasuries bounced off from near-record lows as risk sentiments improved after the German ruling coalition signaled they won’t scuttle ECB chief Mario Draghi’s plans to buy peripheral bonds from the secondary market. The benchmark 10-year yield rose nine basis points, or 0.09 percent, to 1.56 percent while yield on 30-year bonds also jumped nine basis points to 2.65 percent in late afternoon trading, New York time.
10 Year Treasury 1 Month Chart
Bond Funds were down on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) shed $2.09, or 1.61 percent, to close at $127.42, while the Vanguard Total Bond Market ETF (BND) shed 31 cents, or 0.36 percent to end the week at $84.79.
TLT 1 Month Chart
US stocks closed higher Friday helping lift markets following a market-beating July jobs data. The Dow continued with its longest weekly winning streak amid hopes the European Central Bank will soon restart its Securities Market Program to buy Spanish and Italian bonds from the secondary markets to restore investor confidence. The Dow Jones Industrial Average (DJIA) zoomed 217.29 points, or 1.7 percent, to 13,096.17, up 0.2 percent over last Friday while extending its fourth weekly rise. Within the blue-chip index, 27 of the 30 components advanced, led by Bank of America (BAC), Cisco (CSCO) and Kraft Foods (KFT).
Dow Jones Industrial Average 1 Month Chart
The S&P 500 Index (SPX) rose 25.99 points, or 1.9 percent, to 1390.99 with financial gaining the most and telecommunications the least among the 10 business group. The NASDAQ Composite Index (COMP) added 58.13 points, or 2 percent, to close at 2967.90, higher 0.3 percent over last Friday.