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BOND MARKET RECAP

By Rom Badilla, CFA – Bondsquawk.com:

In a rollercoaster ride today, U.S. Treasury yields reversed an earlier decline by inching higher as the yield curve flattened. The short end of the curve sold off and underperformed the rest of the maturity spectrum as the yield on the 2-Year closed higher by 5 basis points to 0.76 percent. The yield on the 5-Year closed the week at 2.02 percent, an increase of 4 basis points. After reaching an intraday low of 3.11 percent, the 10-Year closed higher, inching up 2 basis points from yesterday to yield 3.23 percent. The Long Bond sold off as the yield increased 7 basis points to 4.27 percent.

10-Year Treasury Intraday Chart

Bank of America Merrill Lynch U.S. Corporate Index closed the day at a spread of 197 basis points over comparable duration Treasuries, an increase of a basis point on the day. The High Yield Master Index increased another 10 basis points to close out this volatile week at a spread of 702 basis points.

Stocks finished up after yesterday’s drop and before heading into the weekend. The S&P 500 advanced over 16 points for a gain of 1.5 percent to 1087.69. The VIX closed down by more than 5 points to 40.10, a decline of 12.4 percent.

Both the British Pound and the Euro appreciated by 0.7 percent to 1.4460 and 1.2755, respectively. The Dollar Index declined by 0.1 percent to 85.507.

Gold Spot prices finished down again after yesterday’s decline. Gold closed out the week at 1177.1, a drop of 0.4 percent.