Treasury yields at 2012 high, US stocks rally on better retail sales data

March 13th, 2012 by

Yields on 10-year notes rose for the fifth-day, the longest stretch since Jan. after the Fed voted to leave its ongoing stimulus program unchanged, including operation Twist. The highest retail sales reading in five months also boosted risk appetite, indicating higher energy prices are unlikely to dent consumer spending.

Yield of benchmark 10-year notes jumped 0.09 percentage points, or nine basis points, to 2.12 percent for the day. Yields on 30-year bond also rose 9 basis points to 3.26 percent for the first time since Oct.

Tuesday’s auction of $21 billion in government securities remained well-supported with bid-to-cover ratio recorded at 3.24, compared to an average 3.1 for the past 10 sales.

The iShares Barclays 20 Year Treasury Bond ETF (TLT) shed 2.04 points, or 1.76 percent, for the day, while the Vanguard Total Bond Market ETF (BND) lost 0.25 points, or 0.3 percent over yesterday’s close.

US stocks rallied late Tuesday, ahead of an early release of Federal stress-test results of the nation’s biggest banks, with the NASDAQ Composite Index topping the 3,000 level for the first time in 11 years.  A higher dividend announcement by JP Morgan Chase & Co, better retail sales reading in Feb., and continuation of record low rates by the Fed added to the euphoria. Treasury yields rose to 2012 highs as the Fed raised its assessment of the economy amid better labor market numbers and stopped short of fresh measures to lower borrowing costs.

The Dow Jones Industrial Average (DJIA) reclaimed the 13,000 mark, adding 217.97 points, or 1.7 percent, to close at 13,177.33, the biggest single-day jump since Dec.20. Blue-chip gainers for the day was led by JP Morgan Chase (JPM), up 7 percent on the day after the bank announced it passed Fed stress-tests, would hike quarterly dividends, and repurchase $15 billion of its stocks by Q1, 2013.

The S&P 500 Index (SPX) climbed 24.87 points, or 1.8 percent, to 1395.96, with the financial sector leading the rally among the 10-sector index.

The NASDAQ Composite (COMP) zoomed 56.22 points, or 1.9 percent, to close at 3039.88, its highest level since November 2000. The NASDAQ last managed to retain the level through close on Dec. 11, 2000.

For every stock declining, more-than three stocks advanced on the NYSE. Volume was thin at 907 million.

Crude prices fluctuated during the day’s trade, with oil futures for April delivery settling 37 cents higher at $106.71 a barrel.

Gold futures for April delivery shed $5.60 to end at $1,694.20 an ounce.

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