Treasury Yields Touch New Lows; Stocks Down Six Percent in May

(Bond Market Wrapup for May 31st, 2012) Five-, seven-, and 10-year yields slumped to record lows as investors sought refuge in safe haven assets amid fears that the US economy is slowing down.

The yield on 10-year notes pared losses after a report suggested support for Greece’s pro-bailout party is gaining ground and the International Monetary fund was discussing contingency plans for Spain’s banking industry. The Chicago PMI, a barometer of manufacturing activities in the Midwest dropped for the third consecutive month to 52.7, the least since May 2009.
Treasuries rose, pushing the 10-year benchmark yield lower by five basis points, or 0.05 percent, to an all-time low of 1.57 percent. The 10-year yield had touched a low of 1.53 percent during the day’s trade after weekly jobless claims came in higher than expected. Yield on 30-year Treasury Bonds dropped six basis points, or 0.06 percent, to 2.65 percent.

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 jumped $1.46, or 1.16 percent, to $127.60 while the Vanguard Total Bond Market ETF BND gained 16 cents, or 0.19 percent to end the month at $84.51.

TLT 1 Month Chart

US stocks ended lower Thursday, capping the worst month in two years with the Dow snapping its seven-month long winning streak. Sentiments weakened further after a report from payroll services firm ADP showed US companies added 133,000 jobs in May against a forecast of 157,000.
The Dow Jones Industrial Average (DJIA) slipped 26.41 points, or 0.2 percent, to 12,393.45, capping its worst month in two years and down 6.2 percent for May. 14 companies of the 30-component index closed higher lead by AT&T T, Bank of America BAC and Walt Disney DIS. Caterpillar CAT, Exxon Mobil XOM and chipmaker Intel Corp INTC led the decliner’s list.

Dow Jones Industrial Average 1 Month Chart

The S&P 500 Index (SPX) shed 2.99 points, or 0.2 percent, to end the month at 1310.33, off 6.3 percent for the month. Only utilities in the 10-sector index closed lower.
The tech-heavy NASDAQ Composite Index (COMP) slipped 10.02 points, or 0.4 percent, to close at 2827.34, down 7.2 percent on the month and worst since may 2010.
Advancers just managed to catch-up with the decliners on the NYSE.
Oil prices for July delivery lost $1.29 to close at $86.53 a barrel.
Gold futures for June delivery dropped 80 cents to $1,562.60 an ounce.