Treasuries, Gold Rise on Fed Bets as Oil Gains on Syria
Treasury yields slid, the dollar sank and gold rose as slower-than-forecast jobs growth eased concern the Federal Reserve will cut stimulus. Oil jumped to the highest since May 2011 and U.S. stocks erased gains amid tension between American and Russia over Syria’s civil war.
U.S. 10-year yields fell six basis points to 2.93 percent at 4 p.m. in New York after sliding 13 points earlier and jumping to a two-year high of 3.005 percent before the jobs report. The Bloomberg U.S. Dollar Index decreased 0.7 percent, with the yen appreciating 1 percent to 99.07 per dollar. Oil advanced 2 percent to $110.53 a barrel and gold increased 1 percent to $1,386.50 an ounce. The Standard & Poor’s 500 Index ended little changed at 1,655.17 after retreating as much as 0.9 percent and gaining 0.6 percent, its biggest swing since June.
U.S. payrolls rose by 169,000 last month, less than the 180,000 estimate in a Bloomberg survey of economists and easing concern about the size of potential cuts to Fed bond purchases when policy makers meet Sept. 17-18. Fed Bank of Chicago President Charles Evans said before the report that the central bank shouldn’t taper its $85 billion in monthly stimulus until inflation and economic growth pick up. U.S. stocks reversed gains toward the end of the session as Al-Arabiya TV reported that Syrian government forces shelled a Damascus neighborhood with gas, citing unidentified activists.
The payroll data “are surprisingly soft compared to where expectations have been trending -- it’s still a soft recovery,” said Kathy Jones, a New York-based fixed-income strategist at Charles Schwab & Co., which has $2.12 trillion in client assets. “This has to give them a bit of pause. Coming into this, I thought tapering was a done deal.”
The gain of 169,000 workers last month followed a revised 104,000 rise in July that was smaller than initially estimated, Labor Department figures showed. Unemployment dropped to 7.3 percent, the lowest since December 2008, as more workers left the labor force.
The jobs data hasn’t derailed economists’ expectations that the Fed will taper its bond buying by $10 billion a month at its September meeting. Chairman Ben S. Bernanke and his colleagues will reduce Treasury purchases to $35 billion from $45 billion while maintaining mortgage-bond buying at $40 billion, according to the median of 34 responses today in a Bloomberg News survey of economists. That was unchanged from an Aug. 9-13 poll, as was a projection that the program will end in June.
U.S. five-year yields sank nine basis points to 1.76 percent, while 30-year rates decreased 1.7 basis points to 3.87 percent. U.S. government debt has lost investors 4.3 percent this year, which would be the biggest annual decline since data going back to 1978, according to Bank of America Merrill Lynch indexes. Ten-year yields were at a two-year high today before the jobs report after increasing about 1.25 percentage points from 1.76 percent at the end of last year.
The S&P 500 started the session higher before sinking to its lowest level of the day as Russian President Vladimir Putin said at a Group of 20 summit that last month’s chemical attack in Syria was “provocation” by rebels and Russia will continue to assist the nation if it’s attacked. U.S. President Barack Obama has said the chemical assault was the work of Syria’s government and has pressed for U.S. airstrikes. It recovered losses by 11 a.m. before turning lower in the final hour of trading and the report of shelling in Damascus.
The benchmark gauge of U.S. equities capped weekly gain of 1.4 percent.
Lennar Corp. and D.R. Horton Inc. jumped at least 1.9 percent to pace gains among homebuilders as bond yields plunged. American Tower Corp. climbed 4.6 percent after agreeing to acquire the parent company of rival Global Tower Partners for about $3.3 Billion. Timken Co. advanced 2.1 percent on plans to spin off its steel unit. Mattress Firm Holding Corp. dropped 15 percent after cutting its forecast.
The yen rebounded today from its weakest close against the dollar since July 24. Today’s decline in the Bloomberg U.S. Dollar Index, which tracks the currency against 10 major peers, turned it 0.3 percent lower for the week.
German 10-year bund yields fell nine basis points to 1.95 percent after rising above 2 percent for the first time in 17 months yesterday. U.K. 10-year gilt yields lost seven basis points to 2.94 percent as the securities pared a seventh weekly decline, the longest run since February 2007.
Almost two stocks gained for every one that declined in the Stoxx Europe 600 Index, sending the gauge up 0.5 percent and extending its weekly advance to almost 3 percent.
ProSiebenSat.1 Media AG lost more than 1 percent as Telegraaf Media Groep NV sold its 6 percent stake in the German broadcaster. Deutz AG plunged 9.3 percent after an investor sold an 8.4 percent holding in the maker of diesel engines. Air France-KLM Group added 4 percent as the airline said that its passenger traffic rose 4.9 percent in August.
The MSCI Emerging Markets Index increased 0.9 percent, rising for a third day in its biggest weekly advance in almost two months. India’s S&P BSE Sensex index jumped 1.5 percent and the rupee gained 1.3 percent, capping its first weekly gain in four weeks.
The gauge touched 54,112.60 in Sao Paulo trading, rising 20 percent from its July 3 low of 45,044.03, before paring gains. Eike Batista’s OGX Petroleo & Gas Participacoes SA and state-run oil producer Petroleo Brasileiro SA also were among the biggest contributors to the Ibovespa’s climb today.
The real has dropped 7.7 percent in the past three months, the most among 16 major currencies tracked by Bloomberg, lifting exporters as it drives up the local-currency receipts on their overseas sales. The S&P GSCI index of 24 raw materials has increased more than 5 percent in the same period as manufacturing strengthened and imports increased in China, Brazil’s biggest trading partner.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong decreased less than 0.1 percent and the Shanghai Composite Index gained 0.8 percent before the release of August trade data on Sept. 8. Overseas shipments are expected to have gained 5.5 percent from a year ago, compared with a 5.1 percent advance in July, according to the median estimate in a Bloomberg survey.
Tin jumped 4 percent to $22,940 a metric ton, the most since April, on the London Metal Exchange, the world’s largest metals bourse. Indonesia imposed rules on exporters to trade the metal on the Indonesia Commodity and Derivatives Exchange. Indonesia accounts for 40 percent of global tin exports. Tin producer PT Timah declared force majeure on shipments. Its shares jumped 5.8 percent in Jakarta.
Silver, oil, nickel and sugar jumped at least 1.7 percent to lead gains in 21 of 24 commodities in the S&P GSCI Index, sending the gauge up more than 1 percent.
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