Treasuries dropped, pushing 10-year note yields to the highest level since October, a day after the Federal Reserve raised its assessment of the U.S. economy and sapped demand for the safety of government debt.
Treasuries fell as a report showed weekly jobless claims matched a four-year low and Federal Reserve Chairman Ben S. Bernanke for the second day failed to indicate the central bank will boost economic stimulus.
U.S. stocks climbed, sending the Dow Jones Industrial Average to its first close above 13,000 since 2008, as confidence jumped to a one-year high and oil retreated for a second day. The euro gained before the European Central Bank provides funds tomorrow to support banks.
Treasury 30-year bonds rallied the most in more than a year as the Senate approved a debt-limit increase and a report showed personal spending unexpectedly fell in June, reinforcing speculation the economy is slowing.
Treasuries had the biggest annual return since the depths of the financial crisis in 2008 as Europe’s debt turmoil spurred investor demand for refuge even as Standard & Poor’s cut America’s credit rating.
Treasury 10-year note yields traded at almost the lowest in six weeks amid concern contagion from the European debt crisis will slow global economic growth, stoking demand for the safety of U.S. government debt.