Treasuries fell a second day after a private jobs report boosted speculation growth is strong enough for the Federal Reserve to consider higher rates. U.S. stocks were little changed near records, while emerging-market equities climbed to a 13-month high and copper gained.
The Standard & Poor’s 500 Index rose 0.1 percent at 4 p.m. in New York, extending an all-time high. The Dow Jones Industrial Average gained 0.1 percent to a record after yesterday rising to within two points of 17,000 in intraday trading. The MSCI Emerging Markets Index advanced 0.8 percent. The 10-year Treasury yield rose six basis points to 2.62 percent. Copper climbed to a 19-week high, while West Texas Intermediate crude slid to a three-week low.
U.S. companies added 281,000 workers to their payrolls in June, figures from the ADP Research Institute showed today, before the Labor Department’s monthly job’s report tomorrow. A gauge of global equities closed at an all-time high yesterday after data showed manufacturing activity expanding in countries from China to the U.K. and the U.S. Federal Reserve Chair Janet Yellen said there is no need to change current monetary policy to address financial stability concerns. American equity markets close at 1 p.m. tomorrow before a holiday.
“The economy is getting slowly better, and as a result you are seeing a general move higher in yields,” said Adrian Miller, director of fixed-income strategies at GMP Securities LLC in New York. “The bond market is telling you the economy is improving, but low levels of rates mean growth is still slow and inflation will not be a threat. All eyes will be on the jobs report.”
Data from employment to housing is fueling confidence that the world’s largest economy is rebounding after the worst contraction in gross domestic product since 2009. Economists in a Bloomberg survey forecast the Labor Department will report tomorrow that employers added 215,000 jobs in June, compared with 217,000 in May.
The ADP data today indicated staffing at companies climbed last month by the most since November 2012, boosting bets growth is heating up enough for the Fed to consider raising interest rates. The yield on benchmark 10-year Treasuries touched the highest in more than a week today. The average yield for the past decade is 3.41 percent. The Fed has kept its benchmark rate near zero since December 2008.
Yellen said last month that accommodative monetary policy, rising property and equity prices and the improving global economy should lead to above-trend growth. She emphasized the need to put more Americans back to work and downplayed concerns about asset-price bubbles and incipient inflation.
Yellen said today that regulatory tools, and not interest rates, should be the main way to promote financial stability. The comments are significant because economists worry that central banks may now be causing a worldwide reach for yield as interest rates are suppressed by monetary policy.
The European Central Bank will probably keep interest rates unchanged at its meeting tomorrow after cutting its benchmark rate to a record low last month, according to the median forecast of economists in a Bloomberg survey.
“The ADP data is very strong,” Jim McDonald, chief investment strategist at Chicago-based Northern Trust Corp., said by phone. His firm manages about $915 billion of assets. “It’s another sign that we’re regaining some momentum in the latter part of the year. People are probably not going to want to have big bets on ahead of the payroll number.”
Bank of America Merrill Lynch’s MOVE Index, which measures price swings in Treasuries based on options, reached 52.74 basis points on June 30, the lowest closing level since May 9, 2013. The gauge, which was 53.25 yesterday, has dropped from last year’s high of 117.89 basis points reached on July 5.
The equities market is experiencing its smallest swings of the year. The S&P 500 moved 0.21 percentage point from its highest and lowest points today, the second-smallest swing since 1993 after a 0.20 reading in December. The gauge rallied 0.8 percent to an all-time high yesterday, after capping a sixth straight quarterly advance, as U.S. equities extended a rebound from the selloff that started with biotechnology and small-cap stocks about three months ago.
Among stocks moving, Constellation Brands Inc. climbed 2.4 percent today after boosting its earnings forecast. Airlines posted the biggest loss among S&P 500 industries after Delta Air Lines Inc.’s traffic growth slowed in June. Delta slid 5.2 percent.
The Dow average climbed 0.8 percent to 16,956.07 yesterday, while the Dow Jones Transportation Average gained 0.7 percent to 8,261.70, the first time in almost a month that both indexes reached records on the same day, data compiled by Bloomberg show. The Russell 2000 Index of small companies, which touched an intraday record yesterday, slipped 0.5 percent today.
“A little bit of that strong momentum from yesterday is slowing,” Joe Bell, senior equity analyst at Cincinnati-based Schaeffer’s Investment Research Inc., said by phone. “I think we got a nice start to the third quarter here yesterday and it’s just a matter of the fact that after you have those huge days, people try and take some short term profit.”
The MSCI gauge for developing nations climbed to 1,059.62, heading for the highest close since May 2013. India’s S&P BSE Sensex rose 1.3 percent and the Hang Seng China Enterprises Index of mainland shares listed in Hong Kong added 1.1 percent as trading resumed after a holiday. Russia’s Micex advanced 1.1 percent.
The pound appreciated 0.3 percent to 79.55 pence per euro, its strongest level since October 2012 amid a pickup in U.K. construction. Markit Economics said its Purchasing Managers’ Index increased to 62.6 from 60 in May. That’s the highest since February and compares with economists’ forecast in a Bloomberg News survey for a decline to 59.8.
The Bloomberg Dollar Spot Index, which measures the greenback against a basket of 10 major currencies, rose 0.3 percent from about an eight-week low.
The euro declined 0.2 percent to $1.3655 after rising to $1.3700 yesterday, the strongest level since May 21. It was little changed at 138.94 yen. The Japanese currency lost 0.3 percent to 101.79 per dollar.
Yields on 10-year German debt rose four basis points to 1.29 percent. Spain’s yield climbed nine basis points to 2.73 percent amid speculation the ECB won’t add stimulus tomorrow.
Cotton fell 0.8 percent to 72.8 cents a pound. A drop below 72.2 cents a pound would put prices at the lowest since November 2012. China, the world’s top consumer, has been auctioning supplies from state inventories and the U.S. Department of Agriculture this week forecast U.S. farmers will increase plantings 9.2 percent this year.
Copper futures for September delivery rose 1.9 percent to $3.265 on prospects for higher demand. Earlier the price reached $3.2665, the highest for a most-active contract since Feb. 20.
West Texas Intermediate for August delivery fell 0.8 percent to settle at $104.48 a barrel in New York. Brent crude fell 0.9 percent to end at $111.24, the lowest since June 11. Rebels in eastern Libya said two oil ports they have held for a year, including the country’s biggest, are free to reopen.