U.S. Bond Yields on Rise; Deficit Up 14%

123jump.com Staff
10 Jun, 2009
New York City

The yields on U.S. Treasuries increased as the bond auction raised $19 billion. The U.S. budget deficit in May surged 14% to $189.7 billion. Russia may switch some of its dollar reserves in the IMF bonds. Bond yields are now nine-month high as the U.S. debt offering surges.

[R]5:00 PM New York, 10:00 PM London, 8:00AM Sydney – The yields on U.S. Treasuries increased as the bond auction raised $19 billion. The U.S. budget deficit in May surged 14% to $189.7 billion. Russia may switch some of its dollar reserves in the IMF bonds.[/R]

The yields on U.S. Treasuries rose as high as 3.99% before closing at 3.97%. The U.S. government raised $19 billion in bond auction today and expects to raise $65 billion this week. The bid-to-cover ratio for the auction was 2.62 and foreign central banks increased the purchase of these bonds. Nearly one third of bonds were purchased by foreign central banks, up from 25% in the previous auction.

The yields on 10-years have jumped to 3.97% from 3.19% at the time of $22 billion auction on May 6.

The U.S. Treasury reported that budget deficit in May surged to $189.7 billion from $165.9 billion a year ago. The U.S. is expected to report budget deficit of $1.86 trillion in the current fiscal year.

Separately, Russia is reported to decide to shift some of its reserves from the U.S. dollar to IMF bonds. The foreign central banks are worried that a surge in U.S. bonds will drag the value of dollar.

Ameriprise Financial declined 9% after it planned $900 million offering. CB Richard Ellis surged 18% after it places $100 million of stocks with hedge funds controlled by Paulson & Co. Citigroup initiated the process of converting preferred shares of $58 billion.

UK stocks edged higher today tracking gains in commodities. Stocks are now following the trends in the commodities and in energy markets. UK production output declined and trade deficit increased to £3 billion in April from £2.7 billion in March.

Stocks in Japan closed higher after financials and shipping companies rallied. Three largest shipping companies edged higher after comments from Credit Suisse. Separately, K-Line is preparing to cut additional 3 billion yen in costs. Machinery orders declined April.

Stocks in India climbed higher as net purchase from foreign investors reaches $5 billion with most of it invested in the last six weeks. HDFC seeks to raise 4,000 crore rupees and Rural Electrification plans to 3,000 crore rupees offering.

Stocks in Australia surge after consumer confidence soars. The government stimulus and first quarter GDP expansion contributed to the confidence boost. The home loans increased in April and loans to first time home buyers were 28% of all loans. Karoon Gas raised A$150 million.

North American Markets

Dow Jones Industrial Average decreased 24.04 or 0.3% to a close of 8,739.02, S&P 500 Index increased 3.28 or 0.4% to 939.15, and Nasdaq Composite Index edged lower 7.05 or 0.4% to close at 1,853.08. Toronto TSX Composite Index closed up 33.67 or 0.3% to 10,581.53.

Of the stocks in S&P 500 index, 163 increased, 331 declined and 6 were unchanged.

Ameriprise Financial, Inc led the decliners in the S&P 500 index with a loss of 7.3% followed by losses in Pall Corp of 7.2%, in Host Hotels & Real Estate of 5.7%, in PNC Financial of 5.7% and in Morgan Stanley of 5.6%.

CB Richard Ellis Group, Inc led gainers in the S&P 500 index with a rise of 14.2% followed by gains in of XL Capital Ltd 8%, in International Paper of 7.6% and Harman International of 7.5%. Dynegy and U.S. Steel added 6%.

South American Markets Indexes

Mexico Bolsa Index increased 76.29 or 0.30% to 25,183.72. Brazil Bovespa Stock Index increased 203.62 or 0.4% to 53,360.75.

Argentina Merval Index increased 0.8%, Chile Stock Market Select index added 1% and Peru Lima General Index declined 0.7%. Colombia IGBC General Index edged higher 0.24% and Venezuela Stock Market Index decreased 0.3%.

Europe Markets Review

In London FTSE 100 Index closed higher 31.96 or 0.73% to 4,436.75, in Paris CAC 40 Index increased 18.54 or 0.56% to close at 3,315.27 and in Frankfurt DAX index higher 53.32 or 1.07 % to close at 5,051.18. In Zurich trading SMI increased 47.72 or 0.89% to close at 5,436.39.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 204.67 or 2.09% to 9,991.49, Hang Seng index in Hong Kong increased 727.17 or 4.03% closed to 18,785.66, CSI 300 index in China higher 29.04 or 0.98% closed to 2,989.60. ASX 200 index in Australia increased 89.50 or 2.27% closed to 4,024.40. The KL Composite index in Malaysia higher 11.18 or 1.04% closed to 1,082.97.

The Kospi Index in South Korea increased 43.04 or 3.14% to close at 1,414.88.SET index in Thailand closed higher 16.82 or 2.77% to 624.55 and JSE Index in Indonesia increased 15.52 or 0.74% closed to 2,108.81. The Sensex index in India increased 339.81 or 2.25% closed to 15,466.81.

Commodities, Metals, and Currencies

Crude oil increased $1.26 to close at $71.27 a barrel for a front month contract, natural gas decreased 2 cent to $3.71 per mBtu and gasoline increased 4.33 cents to 201.00 cents.

Wheat futures closed down 17.75 cents in Chicago trading to $5.96 a bushel. Sugar decreased 0.18 cent in trading at 16.42 cents a pound. Soybean future closed up 2.50 cent to $12.46 a bushel.

Gold decreased $0.10 in New York trading to close at $954.60 per ounce, silver closed up $0.03 to $15.17 per ounce and copper for the front month delivery increased 0.45 cents to $2.370 per pound.

Dollar edged higher against euro to $1.3988 and closed down against the Japanese yen to 98.255.

Yields on 10-year U.S. bonds increased to 3.94% and with 30-year maturities closed up at 4.75%.