Treasuries, Gold Fall as Dollar Rises; Dow Reaches Record

Ten-year Treasury yields jumped the most since July and gold slid as faster-than-forecast growth in U.S. payrolls fueled speculation the Federal Reserve may trim stimulus earlier than expected. The dollar strengthened against most major peers while U.S. stocks rallied.

The yield on 10-year Treasuries jumped 15 basis points to 2.75 percent at 4 p.m. in New York and climbed as much as 16 basis points. Gold futures dropped 1.8 percent to $1,284.60 an ounce. The Standard & Poor’s 500 Index rose 1.3 percent, recouping yesterday’s loss, and the Dow Jones Industrial Average rallied 167.8 points to a record 15,761.78. French bonds fell after S&P downgraded the country’s debt. The dollar climbed 0.4 percent against the euro as it strengthened against 15 of its 16 main counterparts.

Employers in the U.S. added 204,000 workers last month, the Labor Department said, following a revised 163,000 gain in September that was larger than initially estimated. The median forecast of 91 economists surveyed by Bloomberg called for a 120,000 increased. Data yesterday showed faster-than-estimated economic growth. France’s rating was lowered to AA from AA+ at S&P.

“For markets it shows that the labor market continues to tighten and should bring forward people’s estimates of when the Federal Reserve will have to reduce bond purchases,” said David Kelly, the chief global strategist at JPMorgan Funds in New York, which oversees about $400 billion in long-term assets. “Ultimately this is good news for the economy. I think in the long run it’s good news for the stock market.”

Treasury Yields

Thirty-year U.S. bond rates increased 14 basis points to 3.85 percent and two-year note yields increased three basis points to 0.31 percent.

Yields have risen since the Federal Open Market Committee said Oct. 30 that the economy showed signs of “underlying strength” even as policy makers agreed to continue the $85 billion of monthly bond purchases, known as quantitative easing. The next meeting is Dec. 17-18.

The Bloomberg U.S. Dollar Index, a gauge of the currency against 10 major peers, climbed 0.3 percent. The currencies of Norway, Japan and New Zealand led losses against the dollar, weakening at least 1 percent.

The S&P 500 dropped 1.3 percent yesterday, its worst loss since August, and finished the week up 0.5 percent. The gauge has climbed 24 percent in 2013, poised for its biggest gain in a decade, and is trading near its most-expensive price-to-earnings valuation in more than three years.

Market Leaders

Gauges of financial, commodity and consumer-discretionary stocks rose more than 1.5 percent to lead the rebound today as eight of the 10 main S&P 500 industry groups advanced. JPMorgan Chase & Co., Merck & Co. and Goldman Sachs Group Inc. climbed the most in the Dow, gaining more than 2 percent. Twitter Inc. fell 7.2 percent after surging 73 percent in its trading debut yesterday.

Today’s jump in interest rate triggered losses in homebuilders, while fueling gains in insurers. Ryland Group Inc. and Lennar Corp. dropped more than 4 percent to lead declines in 10 of 11 stocks in an S&P index of homebuilders. MetLife Inc. surged 5.4 percent on the prospect that rising yields will improve investment income in a bond portfolio valued at more than $340 billion.

Three shares dropped for every two that rose in the Stoxx Europe 600 Index, leaving the gauge down 0.2 percent today and trimming its weekly gain to 0.4 percent. Finmeccanica SpA sank 6 percent, the most since February, after the Italian arms company predicted a cash outflow for this year amid suspended helicopters payments and a sluggish rail business. Rheinmetall AG retreated 5.8 percent as the German maker of armored vehicles reported declining profit.

European Movers

Numericable SAS, France’s largest cable operator, rallied 15 percent in its trading debut after raising about 652.2 million euros ($875 million) in the country’s biggest initial public offering in four years.

International Consolidated Airlines Group SA advanced 8 percent after the parent of British Airways said third-quarter earnings more than doubled and lifted its full-year outlook. Rolls-Royce Holdings Plc, the world’s second-largest maker of commercial jet engines, gained 3.4 percent after raising the earnings target for its defense aerospace unit.

The MSCI Emerging Markets Index fell for a seventh day, the longest losing streak since March, sliding 1.3 percent. The Shanghai Composite Index dropped 1.1 percent before the start of a Communist Party meeting tomorrow. Benchmark indexes in Russia, South Africa, Turkey, Thailand, the Czech Republic and the Philippines dropped more than 1 percent.

French Downgrade

Ten-year French government debt yields increased seven basis points to 2.22 percent. Since S&P’s first downgrade on Jan. 13, 2012, French government bonds returned more than 10 percent, according to Bloomberg France Sovereign Bond Index. France’s government debt is the second biggest in the euro area, trailing only Italy, and the fourth largest among global sovereign-debt market, according to data compiled by Bloomberg.

Credit-default swaps on France rose one basis point today to 51 basis points after dropping as low as 49 basis points yesterday, the lowest since April 2010. The contracts have fallen from 219 basis points on Jan. 13, 2012.

AT&T Inc. and BNP Paribas SA led 21 billion euros ($28 billion) of bond sales in Europe this week, the busiest in two months.

Dallas-based AT&T sold 2 billion euros of bonds due in eight and 12 years, according to data compiled by Bloomberg. The average yield on investment-grade euro-denominated notes dropped four basis points this week to 1.8 percent, the lowest since June 14, Bloomberg bond index data show.

Commodity Moves

Soybeans, gasoline, Brent crude and corn rose at least 1.5 percent to lead the S&P GSCI Index of commodities up 0.8 percent. Gold, silver and cocoa lost more than 0.8 percent for the biggest declines.

Americans are paying the least to fill their cars in almost two years as refiners process the most crude in a decade, offering some relief to nervous consumers.

The national average retail price sank 1.1 cents to $3.211 a gallon, the lowest since Dec. 20, 2011, AAA, the nation’s largest motoring club, said on its website today. Pump prices are approaching the lowest level since February 2011, just before unrest in the Middle East pushed U.S. crude oil above $100 a barrel and gasoline near $4 a gallon.

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