Investment News Briefs: Treasury Yields Soar To 7-Month High, McDonald Misses Estimates

GM Cans Mid-Size Trucks; Treasury Yields Soar to 7-month High; Airlines Grounded by $9 Billion Loss; Copper Sinks as Dollar Rises; Supreme Court Delays Chrysler Sale; McDonald’s misses estimates; Apple debuts new iPhone

• After repeated attempts to sell its medium-duty truck operations, General Motors Corp. (GMGMQ.PK), yesterday (Monday) said that it would halt their production by July 31. Reuters reported. “After four years of working with multiple potential buyers, General Motors has decided to wind down its medium-duty truck operations,” the automaker said in a statement.  GM plans to cease production of Chevrolet Kodiak and GMC Topkick. The automaker sold about 20,000 of the vehicles last year, down from roughly 30,000 in 2007, as the U.S. economy sank into a deep recession.

• Yields on two-year treasuries soared to the highest level since November, as investors expressed concern that record issuance of U.S. debt may overwhelm demand and the economy showed signs of strengthening yesterday (Monday), Bloomberg News reported.  Prices fell as the government said it would sell $65 billion in notes and bonds this week. The yield gap between two- and 10-year Treasuries narrowed, indicating investors are betting the Federal Reserve won’t keep its target interest rate near zero indefinitely as the economy begins to recover.

• Airline stocks stalled yesterday (Monday) after a forecast by The International Air Transport Association that global carriers could lose $9 billion this year due to rising fuel prices and weak demand, Reuters reported. The aviation lobby group’s forecast was nearly double its March estimate for an industry-wide 2009 loss of $4.7 billion.  “Investors in the airline industry are so sensitive to any new data point that may change the outlook or prospects for recovery,” said Majestic Research analyst Matt Jacob, referring to the IATA data.

• U.S. copper futures for July delivery closed down in concert with losses in other commodity markets yesterday (Monday), as an extended rally in the dollar versus the euro helped keep a lid on the broader complex, Reuters reported.  The dollar extended recent gains against the euro following last week’s stronger-than-expected jobs report.  Copper slipped 3.1 cents to settle at $2.2530 a pound on the New York Mercantile Exchange’s COMEX division.

• Chrysler LLC’s sale to Italian automaker Fiat SpA (FIATY.PK) was halted by Supreme Court Justice Ruth Bader Ginsburg as Fiat’s June 15 deadline for completion of the deal approaches, Bloomberg News reported. Indiana pension funds and consumer groups opposing the deal asked for an order blocking the sale. The motion by the Supreme Court came after a New York federal appeals court allowed the sale.

• Shares of McDonald’s Corp. (MCD) closed down 1.92% in trading yesterday (Monday) after the company missed analysts’ revenue estimates. McDonald’s reported a sales gain of 2.8% in the United States. Analysts were expecting an increase of 3.8%, according to Bloomberg News. Worldwide sales grew 5.1%, exceeding analyst estimates of 4.4%. Unstable exchange rates likely will have a negative impact on earnings per share, which is expected to be 9 cents in the second quarter and 20 cents for the year the company said.

• Apple Inc. (AAPL) yesterday (Monday) unveiled its latest iPhone, the 3GS, at its Worldwide Developer Conference. The phone will function twice as fast for both applications and the Web, Apple said. The Cupertino, Calif.-based Apple also halved the price of its 8GB iPhone currently on the market. The price cut will put its popular app store in more hands.

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