U.S. Treasuries Slide, Gold Tops $1,400; World Markets Sideways

Bikram Pandey
28 Dec, 2010
New York City

U.S. eked out fraction gains as Treasuries fell after weaker than expected demand at the latest $35 billion five-year auction. Holiday retail sales were ahead of expectations. Gold surged and silver closed at a record after consumer confidence dropped and home price index fell.

[R]4:00 PM New York – U.S. eked out fraction gains as Treasuries fell after weaker than expected demand at the latest $35 billion five-year auction. Holiday retail sales were ahead of expectations. Gold surged and silver closed at a record after consumer confidence dropped and home price index fell.[/R]

U.S. indexes showed early strength after holiday retail sales rose more than expected. Apparel and jewelry sales drove the holiday purchases and higher discounts attracted more shoppers online.

Treasuries declined after the latest auction today drew lower than expected demand. Five year securities auction of $35 billion had bid-to-cover ratio of 2.61, lowest since 2.58 in June, according to several bond dealers. The auction yielded today 2.14%.

Two year Treasuries auction of $35 billion drew yesterday 3.71 bid-to-cover ratio and yield rose to six months high of 0.743%.

HP won NASA contract worth $2.5 billion. Kunlun Energy bought stake in PetroChina Natural Gas Pipeline for $2.9 billion.

The European indexes climbed after French GDP rose 0.3% in the third quarter. German industry group lifted German industrial sector growth forecast for 2011. Swiss UBS consumption indicator fell and Swedish retail sales slackened in November. Alcatel-Lucent agreed to pay $137 million to settle U.S. bribery cases.

Tokyo benchmark index declined following weakness in the Chinese stock markets and a stronger yen. Industrial production rises in November for the first time in six months, while unemployment rate stays unchanged. Consumer price index dropped for the 21st month in a row in November.

Shanghai key indexes dropped 1.7% after losing nearly 2% yesterday. Profits at industrial companies moderated in the first eleven months to November. Guizhou Province signs 47 contracts with state-run firms for 300 billion yuan.

Mumbai stocks fluctuated in thin volume trading. Uttar Pradesh signed several agreements with major companies to make the state a power-surplus state. India sought to decide the fate of 82 coal mining licenses that are dormant for last three years.

Cipla received notice from national pharmaceutical pricing authority demanding $10 million. Kingfisher launched five new flights on its domestic network. Zee Entertainment launched four TV channels in Australia.

Commodities, Currencies and Yields

Dollar edged up against euro to $1.311 and fell against the Japanese yen to 82.43. One UK pound fetched $1.537.

Crude oil increased $0.25 to $91.25 a barrel for a front month contract, natural gas edged higher 10 cents to $4.21 per mBtu and gasoline decreased 1.6 cents to 240.50 cents.

Gold increased $23.40 in New York trading to close at $1,406.30 per ounce, silver increased $1.06 to $30.32 per ounce and copper for the front month delivery increased 4.80 cents to $4.32 per pound.

Yield on 10-year U.S. bond increased to 3.47% and on 30-year U.S. bond yield rose to 4.52%.