Dollar Gains as Treasuries, Oil Fall; Stocks Fluctuate

The dollar rose from an eight-month low, while Treasuries fell and U.S. stocks closed little changed, as investors prepared for tomorrow’s employment data. The yen weakened after Japan’s exports trailed estimates, while oil slid below $100 a barrel as American inventories grew.

The Bloomberg U.S. Dollar Index, a gauge of the currency against 10 major peers, rose 0.2 percent at 4 p.m. in New York after last week slumping to the lowest level since February. The yen lost 0.4 percent to 98.184 per dollar. The Standard & Poor’s 500 Index closed little changed at 1,744.66, maintaining a record high set last week. The Stoxx Europe 600 Index increased 0.3 percent for an eighth straight gain, the longest rally this year. Ten-year Treasuries snapped a three-day advance while oil lost 1.6 percent to help lead commodities lower.

The Labor Department’s jobs assessment for September will be released tomorrow after a partial government shutdown delayed the report, with data on construction spending and foreign purchases of U.S. securities also scheduled. The Bank of Japan will continue pumping cash into the economy to spur inflation, Governor Haruhiko Kuroda said today. The Federal Reserve won’t taper bond purchases until March because the budget impasse slowed growth, according to a Bloomberg survey.

“We’ve seen this tendency for safety trades ahead of big numbers this year,” Vassili Serebriakov, a foreign-exchange strategist at BNP Paribas SA in New York, said in a phone interview. “Markets are short dollars, especially against the likes of the euro, sterling. There’s an element of caution, of taking back risk and positioning ahead of the numbers.” A short positions is bet that a currency will fall in value.

Japan Exports

The dollar strengthened against all 16 major peers except the Swedish krona, rising more than 0.5 percent versus the New Zealand dollar, South African rand and Mexican peso. The yen depreciated against 13 of 16 major peers, dropping 0.4 percent versus euro. Europe’s 17-nation currency decreased less than 0.1 percent to $1.3680.

Japan’s exports grew 11.5 percent in September from a year earlier, the finance ministry said in Tokyo today. That missed the 15.6 percent median estimate in a Bloomberg survey. Imports exceeded exports by 932.1 billion yen ($9.5 billion). The BOJ will continue easing until 2 percent inflation has been sustainably achieved, Kuroda said today at a central bank branch managers’ meeting in Tokyo.

U.S. companies including Texas Instruments Inc. and Netflix Inc. were among S&P 500 members scheduled to report quarterly earnings after exchanges close today. Adjusted earnings-per-share beat analyst estimates at 71 percent of the 106 companies in the index that have released their results so far in the reporting period, while 54 percent exceeded sales projections, data compiled by Bloomberg show. Profit rose 4.5 percent for the group.

GE, McDonald’s

General Electric Co. rose 2.3 percent today and added 5.9 percent in two days, its biggest rally since December 2011. GE, buoyed by demand for jet engines and locomotives, last week assured investors that its industrial business is poised to meet a goal for profit-margin growth.

McDonald’s Corp. fell 0.6 percent after reporting global comparative sales rose less than analysts estimated. Boeing Co., UnitedHealth Group Inc. and WalMart Stores Inc. lost at least 0.7 percent to lead declines the Dow Jones Industrial Average down 7.45 points. AT&T Inc. advanced 1.8 percent after agreeing to sell or lease 9,700 wireless towers to Crown Castle International Corp.

JPMorgan Chase & Co. slipped less than 0.1 percent after rising as much as 1 percent and falling as much as 0.8 percent. The bank was said to have reached a tentative agreement to pay a record $13 billion to end civil claims over its sales of mortgage bonds. The negotiations and terms were described by two people with knowledge of the situation who asked not to be named because the meetings were private. Brian Fallon, a Justice Department spokesman, declined to comment.

Fed Predictions

Yields on 10-year Treasury notes were up two basis points at 2.60 percent after a three-day decline. German 10-year bund yields added 1.7 basis points to 1.85 percent.

The Fed will reduce its monthly bond purchases to $70 billion from $85 billion at its March 18-19 meeting, according to the median of 40 estimates in a Bloomberg survey conducted Oct. 17-18.

Existing home sales fell in September for the first time in three months, retreating from an almost four-year high as rising prices and mortgage rates discouraged would-be buyers.

Sales dropped 1.9 percent to a 5.29 million annual rate, the National Association of Realtors reported today in Washington. The median forecast of 67 economists in a Bloomberg survey called for the pace to slow to 5.3 million. Prices climbed 11.7 percent, pushing affordability down to a five-year low, the group said.

Economic Data

The September U.S. jobs report, originally scheduled to be released on Oct. 4, will be issued tomorrow after a delay caused by the 16-day partial federal shutdown. The median forecast of economists is for a gain of 180,000 jobs, with the unemployment rate predicted to hold at 7.3 percent.

Money has been flowing in and out of financial markets more rapidly than ever before this year, a bullish signal as the threat of a U.S. government default fades.

About $47 billion has gone to exchange-traded funds that track everything from stocks to bonds to commodities since Sept. 1, according to data compiled by Bloomberg. That followed about $18 billion pulled in August, $40 billion added in July and $11 billion pulled in June, making it the most volatile period on record for flows. Almost $7 billion went to ETFs on Oct. 17 alone, as Congress passed legislation to avoid a default.

ETF Flows

The unleashing of investor funds this year has coincided with the broadest U.S. stock-market rally in at least a quarter century as fresh cash helped overcome slowing profit growth and concern the Fed will cut stimulus. Resolution of the budget impasse sends an all-clear signal that will spur another round of deposits, according to David Kelly, the chief global strategist at JPMorgan Funds in New York, which oversees about $400 billion in long-term assets.

The Stoxx 600 closed at the highest level since June 2008 as earnings at Royal Philips NV and Akzo Nobel AG beat estimates. Trading volumes were 21 percent less than the 30-day average today according to data compiled by Bloomberg.

Philips, the world’s largest lighting company, and Akzo Nobel, the Dutch maker of chemicals and Dulux paint, jumped more than 5 percent after reporting profit that beat analysts’ estimates. Actelion Ltd. rose 5.9 percent to a six-year high after winning U.S. approval for the Opsumit lung drug.

The cost of insuring against losses on corporate bonds rose, with the Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies increasing one basis point to 86 basis points.

Emerging Markets

The MSCI Emerging Markets Index retreated was little changed after rising for four straight days and reaching a five-month high. The South African rand, Turkish lira and Chilean peso led developing nations’ currencies lower versus the dollar.

The Shanghai Composite Index advanced 1.6 percent, the most in a week, after the government called for “unrelenting” implementation of economic policies including increased domestic consumption. Turkey’s Borsa Istanbul National 100 Index jumped 3.5 percent as trading resumed after being closed most of last week for an Islamic holiday.

Oil declined 1.6 percent to $99.22 a barrel, the lowest settlement since July 1. The U.S. Energy Information Administration said stockpiles increased 4 million barrels to 374.5 million barrels in the week ended Oct. 11. Inventories were forecast to gain 3 million barrels, according to the median of nine analyst estimates in a Bloomberg survey before publication of the inventory report. The report was delayed from last week because of the partial government shutdown.


Coffee, oil, wheat and natural gas lost at least 0.9 percent to lead declines in 14 of the 24 commodities tracked by the S&P GSCI Index, dragging the index down 0.6 percent.

Nickel and silver rose more than 1 percent. The global glut of nickel will extend into a fourth year in 2014 as new technology lowers costs for Chinese furnaces producing record amounts of a lower-grade substitute that helped drive prices into a bear market.

Chinese producers will supply 456,000 metric tons of nickel pig iron in 2014, or 49 percent more than last year, Morgan Stanley estimates. Costs at their rotary kiln electric furnaces more than halved to $11,000 a ton in five years, according to Beijing Antaike Information Development Co. That implies they’re still profitable even after prices slumped 16 percent since the start of 2013, reaching a four-year low of $13,205 in July.

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