Treasuries Rise as Dollar Drops on Jobs Data; U.S. Stocks Slip

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Treasuries rose while the dollar declined as American jobs data spurred doubts over the timing of interest-rate increases. U.S. stocks slipped with European shares before Greece’s referendum on austerity measures.

Yields on 10-year Treasury notes fell four basis points to 2.38 percent by 5 p.m. in New York, and the Bloomberg Dollar Spot Index dropped 0.3 percent. The Standard & Poor’s 500 Index lost less than 0.1 percent, while the Russell 2000 Index of smaller companies declined 0.7 percent. The Stoxx Europe 600 Index slipped 0.4 percent. Chinese shares slid to a three-month low, with the Shanghai Composite Index closing below 4,000. The Swedish krona weakened after the central bank cut key rates.

U.S. data showed job creation expanded in June while wages stagnated and the size of the labor force receded. The figures indicate the economy is improving slowly following a first-quarter slump rather than surging ahead as consumer spending strengthens. The jobs report came before U.S. investors begin their July 4 holiday weekend and Greeks prepare to vote on whether to accept creditors’ bailout proposals.

“You would think that the jobs report would have made the market rally, but it’s kind of fallen into the abyss of Greece,” said Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co. “The market can’t and won’t find it’s footing until the vote. Every rally and selloff are ultimately noise until that happens.”

Wage Growth

Employers added 223,000 jobs in June following a 254,000 increase in the previous month that was less than previously estimated, Labor Department figures showed Thursday. The jobless rate fell to a seven-year low of 5.3 percent as more people left the labor force.

While the U.S. job market has rebounded, faster wage growth has been slow to follow suit. The participation rate, which indicates the share of working-age people in the labor force, decreased to 62.6 percent, the lowest level since October 1977, from 62.9 percent.

The improving labor market outlook is one of the reasons Federal Reserve policy makers have said they may begin to raise benchmark rates this year from near zero. Fed Chair Janet Yellen has said she expects the central bank to raise borrowing costs this year, and that subsequent increases will be gradual without following a predictable path.

“This data shows the economy isn’t quite as strong as many had believed,” Tim Ghriskey, who helps oversee $1.5 billion as managing director and chief investment officer at Solaris Asset Management, said by phone. “The drop in the participation rate is a big issue.”

Rate Bets

Fed funds futures show there’s a 29 percent chance the central bank will increase rates in September, down from 35 percent Wednesday, and a 67 percent chance by December, down from 72 percent, according to data compiled by Bloomberg.

The S&P 500 halted a nine-quarter winning streak Tuesday, losing 0.3 percent in the second three months and extending its worst start to a year since 2010. The gauge fell 6.7 percent this week, a third weekly loss, after Greek negotiations broke down amid Prime Minister Alexis Tsipras’s unexpected announcement of the July 5 referendum.

Greek Finance Minister Yanis Varoufakis said he would resign if the country votes to accept European Union bailout proposals in the referendum. Greece is now under capital controls and has shut banks and its stock market after its European financial-aid package expired and it missed a payment to the International Monetary Fund.

Greek Poll

A survey showed more than 47 percent of those polled leaned toward a “yes” vote, an endorsement of austerity and the international bailout. The “no” camp -- which the government is backing and implies a rejection of those terms -- was 43 percent. The margin of error in the survey of 1,000 people was 3.1 percentage points.

“There’s a looming uncertainty with regard to Greece,” said Joe Bell, a Cincinnati-based senior equity analyst at Schaeffer’s Investment Research Inc. “I still think you’re going to see a lot of people waiting for the weekend to get more clarity with regard to the Greece situation.”

The Stoxx 600 fell after rebounding from a four-month low on Wednesday. Electrolux AB slumped 11 percent after the U.S. government sued to block its takeover of General Electric Co.’s appliance business. Lawyers for Electrolux said there is no justification for the lawsuit.

BP Plc climbed 4.4 percent on London. The company will pay a record $18.7 billion to resolve claims by the U.S. and five states along the Gulf of Mexico related to the 2010 oil spill.

Krona Losses

Health Net Inc. rose 10 percent in the U.S. Centene Corp., a provider of Medicaid insurance coverage, agreed to buy the company for about $6.8 billion in cash, stock and assumed debt.

The Swedish krona declined versus all of its 16 major peers. The Riksbank further reduced its main interest rate into negative levels and expanded bond purchases as the turmoil in Greece bolstered concern over further krona gains.

The New Zealand dollar fared worst, dropping to a five-year low of 66.71 U.S. cents as falling milk prices amplified speculation the nation’s central bank will cut rates this month.

The Shanghai Composite dropped 3.5 percent amid doubts over the effectiveness of government measures to support equities.

China’s securities regulator announced late Wednesday it will no longer require brokerages to force the sale of stock held by clients with insufficient collateral. The Shanghai Stock Exchange said the nation’s two bourses will lower transaction fees by 30 percent on Aug. 1.

Margin Trading

Margin debt on the Shanghai Stock Exchange fell to 1.33 trillion yuan ($214 billion) on Wednesday for an eighth day of losses, the longest stretch of declines since the city’s bourse began to compile the data in March 2010. A five-fold surge in leveraged wagers had helped propel the Shanghai index to a more than 150 percent gain in the 12 months through June 12.

The Hang Seng China Enterprises Index of Chinese companies trading in Hong Kong retreated 1.5 percent.

West Texas Intermediate oil slipped 3 cents to $56.93 a barrel, reversing an earlier gain. Crude capped the biggest weekly decline since March, falling 4.5 percent after an industry report showed that the number of U.S. oil rigs in use advanced for the first time this year.

Gold slipped 0.5 percent to settle at $1,163.50 an ounce. The Bloomberg Commodity Index added 0.3 percent, leaving it up 0.7 percent in the week.

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