Stocks plunged at the start of trading & remained depressed all day. Dow fell 161 (closing near the lows), decliners over advancers 6-1 & NAZ dropped 33 despite a rise in Apple shares. Banks stocks led the selling, taking the Financial Index down 4+ to the 186s, just above the 185 lows 2 weeks ago.
The MLP index sank a very big 6+ to the 369s & the REIT index was off 6 to the 246s, unusually bad days for both. Junk bond funds were a little lower while Treasuries roared ahead, see below. Oil fell $3+ to the 87s, its lowest level this year. However, money seeking a safe haven pushed gold up $17 to $1566, but remaining near its yearly lows.
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Yields on Treasury 10-year bonds fell to a record low as investors sought refuge from the deteriorating credit conditions in Europe. The benchmark yield reached 1.617%, less than its previous all-time low of 1.671% on Sep 23, as Spain struggled to recapitalize its banks & Italian bonds fell when the country sold less than its target at a debt auction. The Federal Reserve announced Sep 21 that it would buy $400B of longer-term Treasuries, funding the purchases with sales of shorter-term notes, in an effort to bolster the spur jobs growth in the US. 30-year bond yields plunged 13 basis points, the most since Dec, to 2.72%. 5 & 7 -year note yields also reached set all-time lows. Benchmark gov bond markets around the world are setting records on haven demand while yielding less than Treasuries, boosting the appeal of the US securities. Yields on the 10-year note are 22 basis points higher than the average for top-rate sovereign debt of nations from Germany to Australia, above the average of 12 basis points in the past year. German 2 year debt yields fell as low zero today, compared with 0.27% for US 2-year notes. US 10-year yields are down from 5.3% in Jun 2007, before the financial crisis intensified, & below the average of 4.96% during the past 20 years. Treasuries have returned 2.6% since the end of Mar, after returning 9.8% last year, including reinvested interest, the most since 2008. Additional buying will reduce these yields further. Money is flowing out of stocks into Treasuries & other safe haven assets.
Treasury Yields Tumble to Records as Europe Spurs Bids
The MLP index sank a very big 6+ to the 369s & the REIT index was off 6 to the 246s, unusually bad days for both. Junk bond funds were a little lower while Treasuries roared ahead, see below. Oil fell $3+ to the 87s, its lowest level this year. However, money seeking a safe haven pushed gold up $17 to $1566, but remaining near its yearly lows.
JPMorgan Chase Capital XVI (AMJ)
Click below for the latest market update:
Treasury yields:
U.S. 3-month | 0.066% | |
U.S. 2-year | 0.266% | |
U.S. 10-year | 1.627% |
| CLN12.NYM | ....Crude Oil Jul 12 | 87.89 | ... 2.87 | (3.2%) |
Yields on Treasury 10-year bonds fell to a record low as investors sought refuge from the deteriorating credit conditions in Europe. The benchmark yield reached 1.617%, less than its previous all-time low of 1.671% on Sep 23, as Spain struggled to recapitalize its banks & Italian bonds fell when the country sold less than its target at a debt auction. The Federal Reserve announced Sep 21 that it would buy $400B of longer-term Treasuries, funding the purchases with sales of shorter-term notes, in an effort to bolster the spur jobs growth in the US. 30-year bond yields plunged 13 basis points, the most since Dec, to 2.72%. 5 & 7 -year note yields also reached set all-time lows. Benchmark gov bond markets around the world are setting records on haven demand while yielding less than Treasuries, boosting the appeal of the US securities. Yields on the 10-year note are 22 basis points higher than the average for top-rate sovereign debt of nations from Germany to Australia, above the average of 12 basis points in the past year. German 2 year debt yields fell as low zero today, compared with 0.27% for US 2-year notes. US 10-year yields are down from 5.3% in Jun 2007, before the financial crisis intensified, & below the average of 4.96% during the past 20 years. Treasuries have returned 2.6% since the end of Mar, after returning 9.8% last year, including reinvested interest, the most since 2008. Additional buying will reduce these yields further. Money is flowing out of stocks into Treasuries & other safe haven assets.
Treasury Yields Tumble to Records as Europe Spurs Bids
Bank of America, a Dow stock, sees damage to the world’s economy from a euro breakup as a greater threat to the lender than any loss it may suffer on direct European holdings, said CEO Moynihan. The continent’s debt crisis is already a drag on global business, & the firm has been preparing for upheaval if the € falls apart, Moynihan said. “It’d be not a very pleasant day and hopefully it never happens,” Moynihan said. “It would have a pretty good knock-on effect in terms of slowing down the world for a while, until the world figured out what this meant and what would happen.” BAC & its rivals are under pressure as new regulations pinch revenue & Europe’s debt crisis roils financial markets. The turmoil intensified as Italy failed to meet its maximum target at a debt sale, Spain struggled to bolster its banks & a Greek poll showed gains for parties opposed to austerity that came with an intl bailout. “We worry about it a lot, and the only thing you can do is continue to position your direct position as well as you can,” said Moynihan. The firm reported $15.1B in loans, counterparty risk & investments in Greece, Ireland, Italy, Portugal & Spain in Q1, before hedges meant to minimize risk, down from $15.3B in Q4, & a small fraction of its $2.2T total assets. Much of the European exposure is with large firms that operate around the world, Moynihan said. In the US, Moynihan said consumer spending is being helped by lower gasoline prices & corps keep finding ways to adjust their models to bolster profit. “Europe and everything colors the viewpoint of the people around the capital markets,” Moynihan said. “But if you look out in general America, consumer spending is consistently up month after month after month.” Some of the bank’s business teams need to do a better job to increase commercial lending, Moynihan said. His thoughts are troubling for eurozone business. The stock fell 24¢.
BofA Sees Euro Breakup Drag on Global Ecnonomy as Threat
Bank of America Corporation (BAC)
Apple CEO Cook said that television is an area of “intense focus” for the company as it seeks to add products that can build on the success of Macs, iPhones & iPads. “This is an area of intense focus for us,” Cook said in an interview yesterday. “We’re going to keep pulling this string and see where it takes us.” The company is working on a television that may be unveiled this year & released in 2013. The company sells a set-top box called Apple TV that lets customers stream video from its products or the internet to TVs. Still, that device has yet to gain wide acceptance. During the conference, Cook said that AAPL has “great appreciation” for Facebook (FB). “The relationship is very solid,” he said. “We have great respect for them. I think we can do more with them. Stay tuned on this one.” Cook also said that AAPL remains on the lookout for acquisitions, though it’s not currently seeking a large-sized deal. He added that it’s possible that more manufacturing of his company’s products will happen in the US & the iPhone, its best-selling device, might one day be assembled in the US. The stock rose $7+ to the 579s, but is still off its recent record at $644.
Apple CEO Tim Cook Says TV Is ‘Intense Focus,’ Sees Closer Facebook Ties
Apple Inc. (AAPL)
Dow is up YTD, but barely with a 200 gain. This was not the scenario the bulls had in mind when they were revising their forecasts at the end of last year. The euro story is turning into a disaster, which affects most companies around the world. China growth is slowing. It may be doing well compared with the rest of the world, but a slowdown is felt globally. Then there's the US. The recovery is better than in other countries (like many in Europe), but it is not getting a grade of A. Unemployment remains high & the housing depression limits the recovery. The beginning of 2013, when tax breaks expire & higher taxes for Obamacare kick in, is not that far away. Dow is down 800 in May & it looks like it will extend its slide in Jun, starting off with a sub-par jobs report on Fri.
Dow Industrials
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