Treasuries, Gold Rally as Dollar Drops After Jobs Data

Treasuries rallied with gold and the dollar retreated after slower growth in U.S. payrolls last month eased concern stimulus cuts would accelerate. The Standard & Poor’s 500 Index rose to cap a weekly gain.

The 10-year Treasury yield fell 10 basis points to a three-week low of 2.86 percent at 4 p.m. in New York. The S&P 500 rose 0.2 percent, erasing a loss of 0.3 percent. The dollar weakened against all but one of its 16 major counterparts. The MSCI Emerging Markets Index added 0.8 percent. Gold gained the most in a week, copper rallied and oil jumped from an eight-month low after China’s imports grew. Corn rebounded from a 40-month low in Chicago after a government report.

U.S. employers hired 74,000 workers in December, the slowest advance since January 2011, indicating a pause in the recent strength of the U.S. labor market that may partly reflect the effects of bad weather. The unemployment rate fell to 6.7 percent, as more people left the labor force. China’s imports rose the most in five months in December, and industrial production in France and Spain beat estimates, other data showed today.

“This could actually be good news for the market,” Quincy Krosby, a market strategist for Newark, New Jersey-based Prudential Financial Inc., which oversees more than $1 trillion, said by phone. “If these numbers don’t get revised upward, it will keep the Fed careful about wanting to taper too quickly.”

Cutting Purchases

The Federal Reserve said last month it will cut monthly asset purchases to $75 billion from $85 billion. Policy makers will trim stimulus in $10 billion increments over the next seven meetings before ending them in December, according to a Bloomberg survey of economists on Dec. 19.

Pacific Investment Management Co.’s Bill Gross, manager of the world’s biggest bond fund, said the Fed is on course to end its bond buying this year even with slower job growth.

“I do believe that by the end of 2014, the Fed wants to be out,” Gross said in a radio interview on “Bloomberg Surveillance” with Tom Keene, referring to the central bank’s purchases in its quantitative easing program. Yet “by the end of 2015, they will not have raised interest rates.”

U.S. debt gained as signs the labor market may not be as strong as thought gave pause to bond bears who had pushed yields on benchmark 10-year Treasuries to their highest levels this month since July 2011. Futures data showed traders are assigning lower odds that the Fed will start increasing interest rates in January 2015. The Fed’s benchmark rate target has been a range of zero to 0.25 percent since 2008.

The S&P 500 rose 0.6 percent this week, trimming its decline for the year to 0.3 percent.

U.S. Stocks

Companies that pay the highest dividends such as utility stocks advanced as bond yields slipped, boosting the allure of equity income. Alcoa Inc. dropped 5.4 percent after profit missed analysts’ estimates. Sears Holdings Corp. plunged 14 percent as it forecast a fourth-quarter loss and said sales during the holiday period dropped. Chevron Corp. slid 1.9 percent after saying earnings suffered as energy output declined.

Emerging market stocks added 0.8 percent, trimming this week’s decline to 0.9 percent. The Borsa Istanbul 100 Index drove gains among 94 world stock gauges tracked by Bloomberg amid a bank rally, while Russia’s Micex Index erased losses as OAO Gazprom climbed.

China Data

China’s trade data showed inbound shipments increased 8.3 percent from a year earlier. That compares with the median estimate for 5 percent growth in a Bloomberg News survey. China’s exports rose 4.3 percent with the trade surplus at $25.6 billion, narrower than projected.

A gauge of mainland shares in Hong Kong rose 0.1 percent, while the Shanghai Composite Index decreased 0.7 percent.

Thailand’s SET Index dropped 0.2 percent. Anti-government protesters plan to surround government offices and occupy major intersections in Bangkok starting Jan. 13 to obstruct Feb. 2 elections and force caretaker Prime Minister Yingluck Shinawatra to step down.

An equally weighted basket of the so-called BRICS emerging-market currencies, consisting of Brazil, Russia, India, China and South Africa, jumped by the most since Dec. 23.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 of its major peers, reversed a gain to fall 0.4 percent, the most since October. The greenback dropped 0.7 percent to 104.08 yen after climbing to 105.44 on Jan. 2, the strongest since October 2008. The U.S. currency lost 0.4 percent to $1.3665 per euro.

Commodities Rally

The S&P GSCI Index of 24 commodities added 0.7 percent, the most since Dec. 20, after slipping yesterday to the lowest level since April. The measure still capped a second weekly decline.

Corn futures for March delivery advanced 5 percent, the most since August, to settle at $4.3275 a bushel in Chicago. The government said production and inventories in the U.S., the world’s largest grower and exporter, were smaller than analysts forecast.

West Texas Intermediate oil futures climbed 0.9 percent to to $92.48 a barrel. The price rose as much as 1.9 percent, paring a second weekly loss after falling to the lowest since May yesterday.

Gold futures for February delivery rose 1.4 percent to settle at $1,246.90 in New York and copper for March delivery climbed 1.3 percent to $3.3415 a pound.

Nickel surged the most in three months in London after a report that Indonesia, the world’s biggest producer of the metal from mines, detained Chinese ships as a ban on ore exports nears.

European Stocks

The Europe Stoxx 600 Index climbed 0.5 percent to the highest since May 2008 after retreating 0.4 percent yesterday.

Swatch Group AG added 3.6 percent after disclosing a positive outlook for 2014. Deutsche Lufthansa AG jumped 8.9 percent for the biggest increase in the Stoxx 600 after Europe’s second-largest airline said fuel and unit costs will decline this year as the carrier uses bigger, more modern planes.

Metro AG gained 2.8 percent after a report said its biggest shareholder, Franz Haniel & Cie, may push for replacing its chief executive officer and selling some units. Haniel spokesman said the report was “nonsense.”

German 10-year bunds rose for the first time in three days, pushing the yield seven basis points lower to 1.84 percent. The rate on Portuguese securities of similar maturity was three basis points lower at 5.34 percent before Moody’s Investors Service provides an update on the nation’s credit rating today.

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