Yields on 10-year U.S. Treasurys hit their highest level in 13
months early Tuesday, breaking above 2.11 percent amid a stock
market rally that was centered on what appears to be improving
sentiment about the U.S. economy's short-term outlook.
The latest round of fresh data released Tuesday included a
positive read on consumer confidence-the Conference Board's monthly
Consumer Confidence Survey showed U.S. consumer confidence in May
came in at a five-year high.
Tuesday also brought the latest read on the U.S. housing
market-for the third-straight month, U.S. home values rose
year-on-year, with average home prices up more than 10 percent in
the past year ended March, according to the S&P/Case-Shiller
Home Price report.
The data helped push the U.S. stock market higher, with the
S&P 500 Index and the Dow Jones industrial average each up just
under 1 percent Tuesday. The momentum also pushed yields on 10-year
notes up more than 6 percent to 2.13 percent-their highest level
since April 2012. As bond prices drop, yields rise.
Funds like the iShares Core Total Bond Market Fund
(NYSEArca:AGG), tracking the broad Barclays U.S. debt index
comprising largely U.S. Treasurys, were again losing ground. AGG
dropped below a 52-week low at the outset Tuesday, and worked its
way lower to $109.17 a share at one point, its lowest price strike
since March 2012.
AGG, which has more than $15 billion in assets, has now dropped
1.5 percent in the past month alone, as U.S. stocks have
"Consumers' assessment of current business and labor-market
conditions was more positive and they were considerably more upbeat
about future economic and job prospects," Lynn Franco, director of
Economic Indicators at the Conference Board, said in a press
"Back-to-back monthly gains suggest that consumer confidence is
on the mend and may be regaining the traction it lost due to the
fiscal cliff, payroll-tax hike and sequester," Franco said.
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