(Bond Market Recap for August 23rd, 2012) US Treasuries rose with 10-year notes gaining for the fifth day as an unexpected rise in initial jobless claims fuelled growth worries. However, economic news remained mixed from the US with new home sales in July topping growth estimates.
The yield on benchmark 10-year Treasury notes dropped two basis points, or 0.02 percentage points to 1.67 percent after president of the Fed’s St. Louis bank poured water on further monetary stimulus saying the last minutes were “stale”. Yield on 30-year treasury bonds dropped two basis points to 2.79 percent after flash HSBC-Markit PMI data showed manufacturing in China contracted to 47.8 in Aug. 49.3 in July.
10 Year Treasury Yield – 1 Month Chart
Bond funds were up on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) rising 52 cents, or 0.42 percent, to $124.93 while the Vanguard Total Bond Market ETF (BND) gained 4 cents, or 0.05 percent to end at $84.72.
TLT 1 Month Chart
US stocks turned lower Thursday with the Dow industrials slipping for the fourth day after a US Fed official cast doubts over another round of monetary stimulus. The Dow Jones Industrial Average (DJIA) fell 115.3 points, or 0.9 percent, to 13,057.46, after sinking 126 points on the day. Breadth within the 30-component Dow turned negative with decliners outpacing gainers 28-to-2. Hewlett-Packard (HPQ) led the session’s percentage decliners, slipping 8.2 percent after the PC maker’s 2012 earnings forecast fell short of expectations.
Dow Jones Industrial Average 1 Month Chart
The S&P 500 Index (SPX) rose 11.41 points, or 0.8 percent, to 1402.08 with natural resources faring the worst and health the best among the index’s 10 business groups. The tech-heavy NASDAQ Composite (COMP) shed 20.37 points, or 0.7 percent, to close at 3053.40.