Treasuries Rebound From Loss While Dollar Falls, on Uneven U.S. Recovery
Treasuries rallied from the steepest loss in two weeks and the dollar was near a six-week low against the yen amid U.S. data that signaled an uneven recovery in the world’s largest economy. Asian stocks rose, lifting the region’s benchmark index to a 2 1/2-year high for a second day.
Ten-year yields slid three basis points to 3.45 percent at 5 p.m. in Tokyo, paring the 15 basis point gain yesterday. The dollar fell against 14 of its 16 major peers and fetched 82.10 yen from 82.38 yen in New York. Copper jumped to a record in London, where markets reopen after a two-day holiday. The MSCI Asia-Pacific Index added 0.7 percent to 136.90, set for its highest close since June 2008. The Stoxx Europe 600 Index and futures on the Standard & Poor’s 500 Index both rose 0.1 percent.
A surge in U.S. holiday spending was countered by reports showing that consumer confidence unexpectedly fell and home values dropped, with data tomorrow forecast to show businesses expanded at a slower pace. Additional stimulus measures by the Federal Reserve, which is preparing to buy notes today, have fueled speculation the recovery will strengthen, helping Asian stock and commodity markets to their second year of gains.
“The economy is growing gradually, but not enough to get the Federal Reserve to raise interest rates,” said Yusuke Tanaka, senior dealer Mitsubishi UFJ Trust & Banking Corp. in Singapore, part of Japan’s largest bank. “The yield’s rise is overdone.”
Treasuries tumbled yesterday after a $35 billion sale of five-year securities attracted the lowest demand since June, sending yields to near a seven-month high.
Bonds have returned 4.9 percent in this year, recouping all of 2009’s 3.7 percent loss, according to Bank of America Merrill Lynch data. U.S. securities pared gains this quarter as Fed Chairman Ben S. Bernanke implemented a plan to pump $600 billion into the banking system to maintain the expansion. The Fed today may buy $4 billion to $6 billion of debt due from June 2012 to June 2013 as part of its plan to spur the economy.
The Institute for Supply Management-Chicago Inc. will say tomorrow its business barometer fell to 61.0 this month from 62.5 in November, according to the median estimate of economists in a Bloomberg News survey. The Conference Board’s consumer confidence index fell in December to 52.5, lower than the most pessimistic forecast of economists surveyed by Bloomberg News, figures showed yesterday.
South Korea’s benchmark five-year bonds fell for a fifth day, their longest losing streak in seven weeks, after the surge in U.S. yields. The yield on the 4 percent notes due September 2015 rose five basis points to 4.11 percent, the highest level in more than a week, according to the Korea Stock Exchange.
The U.S. currency yesterday touched 81.82 yen, the lowest since Nov. 12. The greenback was at $1.0121 per Australian dollar from $1.0100 yesterday, when it reached $1.0152, the weakest since Nov. 9.
The euro fell against most of its 16 major counterparts after the European Central Bank said it failed to fully neutralize the extra liquidity created by its bond purchases for a second time since the program began in May.
Oil for February delivery was little changed at $91.40 after yesterday climbing 0.5 percent to $91.49 a barrel on the New York Mercantile Exchange. Oil closed at $91.51 on Dec. 23, the highest since October 2008.
Copper rose as much as 1.1 percent to a record $9,447 a metric ton on the London Metal Exchange, which reopens today after a two-day holiday. Futures on the Comex in New York was little changed after yesterday reaching an all-time high of $4.3350 a pound.
Cnooc Ltd. gained 2.6 percent, helping energy producers to the biggest advance among the MSCI Asian index’s 10 industry groups. The regional gauge has jumped 14 percent this year, extending a 34 percent rally in 2009.
China Rare Earth Holdings Ltd., a manufacturer and wholesaler of rare earth products, jumped 16 percent in Hong Kong trading after China cut its export quota for the minerals in the first round of permits for 2011. Sojitz Corp., Japan’s biggest rare earth importer that last month reached a deal with Australian mining company Lynas Corp., gained 3.5 percent to the highest level since April 21. Lynas soared 11 percent.
“Markets are thin and the moves we’re seeing right now mean little,” said Prasad Patkar, who helps manage about $1.8 billion in Sydney at Platypus Asset Management Ltd. “Investors will look for resolution to Europe’s debt issues and China’s inflation problems, but risk appetite will be better next year than it was this year.”
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