BOND REPORT: Treasurys Lower After Retail Sales, Price Data

By Deborah Levine

Treasurys declined Wednesday after a pair of government reports showed retail sales fell while import prices rose in July.

Two-year note yields (UST2YR) rose 5 basis points, or 0.05%, to 2.48%.

The Commerce Department said purchases at U.S. retailers declined 0.1% last month. Economists surveyed by MarketWatch expected sales to slip 0.3%.

Excluding automobiles, sales rose 0.4% last month, the smallest gain since February. The median forecast was for a 0.5% increase.

The report was "disheartening" in that is showed just how short-lived the tax rebates were, said Stone & McCarthy Research Associates.

The data "suggests the economy in the third quarter will get very little support from consumer spending," analysts wrote in a report. "Inflation remains very much a threat."

Separately, the Labor Department said import prices increased 1.7% in July, mostly on gains in petroleum and natural gas, compared with a 1% gain forecast by economists.

MARKET SNAPSHOT: U.S. Stocks End Lower, Pressured By Oil, Financials

By Polya Lesova

U.S. stocks ended in the red Wednesday, weighed down by a rebound in oil prices and ongoing worries about the financial sector sparked by Merrill Lynch's downgrades of several banks.

The Dow Jones Industrial Average (DJI) fell 109.5 points to 11,532, with only five of its components finishing in positive territory.

Financials led the blue-chip decliners. Shares of Bank of America (BAC) fell 7.3%, Citigroup (C) dropped 3.9% and American Express (AXP) fell 3.1%.

Shares of General Motors Corp. (GM) dropped 7.6% after Moody's Investors Service lowered the company's corporate family rating to Caa1 from B3 with a negative outlook.

The S&P 500 index (SPX) ended down 3.76 points, or 0.3%, at 1,285 points and the Nasdaq Composite (RIXF) finished down 2 points to 2,428.

There was "a solid decline in financials across the board," said Marc Pado, U.S. market strategist at Cantor Fitzgerald.

"There is a deep-seated concern there," Pado said. Also, "you got a pretty decent pop in crude and the market has been keying off of crude the last several weeks."

BOND REPORT: Treasurys Gain As Credit Concerns Resurface

By Deborah Levine

Treasury prices gained ground Tuesday, pushing yields to the lowest in nearly a month, as losses at UBS and write-offs at J.P. Morgan Chase fueled concerns that the effects of the credit crisis are still surfacing.

Ten-year note yields (UST10Y) fell 8 basis points, or 0.08%, to 3.91%, the lowest since July 15. Bond prices and yields move in opposite directions.

"There's clearly a little more concern in the markets as far as weakness in the economy, and financials are driving that," said Mario De Rose, fixed-income strategist at Edward Jones. "That's causing weakness in stocks, and bonds are the alternative."

Beleaguered Swiss bank UBS (UBS) reported a second-quarter loss of 358 million francs ($331 million) and said it would restructure by separating its investment-banking and wealth-management arms after nervous clients withdrew more cash. The latest loss included about $5.1 billion of further write-downs, offset in part by a sizable tax credit.

J.P. Morgan (JPM) had to take a $1.5 billion write-off on mortgage-backed securities and loans, the company said in a Securities and Exchange Commission filing late Monday.

"UBS' dire outlook for credit markets in the second half of 2008 along with J.P. Morgan's write-downs ... underpinned the Treasury bid," Roseanne Briggen, Treasury analyst at Informa Global Markets, wrote in an email.