Treasury yields fall to record low as Dow slides for the sixth straight session

(Bond Market Update for May 9th, 2012) Treasuries rose as Greek leaders struggled to form a political coalition, driving the 10-year benchmark auction-yield to record low levels.  The Treasury sold $24 billion in 10-year notes as demand for the safest asset remained robust and the Greek drama continued unabated.

The benchmark 10-year Treasuries were sold at a yield of 1.855 percent, beating January’s 1.9 percent record low level. Yield on current 10-year notes dropped 1 basis point, or 0.01 percent, to 1.83 percent while yield on 30-year Treasury Bonds remained unchanged at 3.03 percent.

Bond Funds were mixed on the day with the iShares Barclays 20 Year Treasury Bond ETF (TLT) rose 8 cents, or 0.07 percent, to close at $118.87, while the Vanguard Total Bond Market ETF (BND) shed 5 cents, or 0.06 percent to close at $83.94.

US stocks recouped much of the day’s losses suffered earlier following a heavy sell-off, though all the three major indices closed lower Wednesday as political uncertainties clouded investor sentiments.

The Dow Jones Industrial Average (DJIA) fell 97.03 points, or 0.8 percent, to close at 12,835.06, after losing more than 183 points during the day’s trade. This is the sixth consecutive day of losses for the blue-chip index, its longest since an eight-day streak in August 2011. The indexed pared some of its initial losses after Europe’s lifeboat fund – the European Financial Stability Facility (EFSF) issued a statement confirming that Greece would receive its next round of funding.

The S&P 500 Index (SPX) shed 9.14 points, or 0.7 percent, to end at 1354.58 with industrials faring the worst among its 10 industry groups. Dairy producer Dean Foods Co (DF) soared 11 percent after the firm beat the street’s quarterly profit estimates and upgraded its 2012 earnings guidance. Department store chain Macy’s Inc (M) slipped 3.7 percent despite its Q1 earnings beating forecasts.

The tech-heavy NASDAQ Composite Index (COMP) lost 11.56 points, or 0.4 percent, to close at 2934.71. Media company Walt Disney (DIS) shares hit an all-time high after the firm reported strong profit growth.

For every stock advancing, nearly two declined on the NYSE.

Oil prices for June delivery eased 20 cents to close at $96.81 a barrel.

Gold futures for June delivery slumped $10.30 to $1,592.20 an ounce.