Treasuries Slump in Oil-Driven Rout While Banking Stocks RallyBy and
Dollar retreats versus yen as U.S. payrolls, Italian vote loom
Brazilian assets tumble on politics; Asian index futures fall
The selloff in global bonds extended into December, while financial shares built on their post-U.S. election gains amid speculation Donald Trump’s policies will fuel inflation and spur growth. Crude oil climbed above $50 a barrel in New York.
Treasuries extended their steepest monthly loss since 2009 with key U.S. jobs data due Friday. Rising rates boosted banks, while technology shares fell as investors sold off a sector that had been one of 2016’s biggest equity-market winners before Trump’s victory buoyed industrial and financial stocks. Energy companies headed for their best two-day rally since June as crude broke above $50 a barrel. The dollar fell versus the euro and the yen as traders awaited the payrolls report and Italy’s referendum.
Investors will be looking to Friday’s non-farm payrolls data for more clues as to the pace of interest-rate increases in the U.S., after a private report showed the biggest increase in private-sector workers since June. The rebound in oil prices following OPEC’s pact to reduce crude output is providing further support for so-called reflation trades, which have gained ground since Trump’s election fueled bets on an increase in fiscal stimulus. Fed funds futures put odds of a Federal Reserve rate hike this month at 100 percent.
The “energy rally should help broader tape since it has lagged for so long and now will help with the reflation trade,” Brett Mock, a managing director at JonesTrading LLC in Mill Valley, California, said in an interview. “Bond yields higher, crude higher -- all inflation signals which central banks support to fight off years of deflationary pressure.”
- Ten-year Treasury yields increased by six basis points, or 0.06 percentage point, to 2.45 percent as of 4 p.m. in New York, set for their highest close since July 2015.
- The yield on similar-maturity German bunds had the biggest jump in a year after Reuters reported the European Central Bank will extend its bond purchases beyond March at a meeting next week, and will also consider sending a formal signal that debt buying will eventually end.
- Economists predict an 180,000-worker increase in November payrolls, after they climbed by 161,000 in October.
- The Bloomberg Barclays Global Aggregate Total Return Index of bonds fell 4 percent in November, its biggest decline since index was started in 1990.
- The S&P 500 Index fell 0.4 percent to 2,191.08 Thursday, retreating for the third time in four days after ending last week at a record high.
- The Dow Jones Industrial Average added 0.4 percent.
- Technology shares extended their declines since the American election, with the Nasdaq Composite Index down 1.4 percent amid concern over Trump’s trade policy and as investors rotated out of one of the year’s most favored investment sectors.
- The Philadelphia Semiconductor Index dropped 4.9 percent, the most since Britain voted to leave the European Union.
- Ford Motor Co. and General Motors Co. rallied more than 3 percent as most automakers reported November sales that exceeded analysts’ forecasts.
- Brazilian stocks fell the most among major benchmarks in dollar terms amid renewed political turmoil. The Ibovespa stock index slumped 3.9 percent as under-the-radar proposals included by the lower house in anti-corruption measures spooked investors.
- Bloomberg’s Dollar Spot Index, which tracks the greenback against 10 major peers, dropped 0.4 percent after advancing 0.5 percent on Wednesday. The gauge strengthened 3.9 percent in November, the most since September 2014.
- A measure of euro volatility jumped to the highest level since before the Brexit vote as investors braced for Italy’s referendum on constitutional reform, Austria’s presidential election on Dec. 4, and the ECB’s policy decision in a week’s time.
- The pound jumped 0.7 percent to $1.2593 as Brexit Secretary David Davis said the U.K. would consider making contributions to the EU in order to secure the best possible access to the single market.
- Brazil’s real and the Mexican peso were the biggest losers Thursday, weakening more than 0.9 percent.
- West Texas Intermediate crude added 3.3 percent to $51.06 a barrel after surging 9.3 percent last session, the biggest one-day gain since Feb. 12.
- The OPEC-led deal forged Wednesday was broader than many people had expected, given that it extended beyond the bloc with Russia agreeing to unprecedented cuts to its own output.
- U.S. natural gas advanced for a ninth straight day, extending gains to a two-year high after a government report showed stockpiles of the heating fuel slid more than was typical for this time of year.
- Gold slipped 0.1 percent in the spot market to its lowest price since February.
— With assistance by Stefania Spezzati, Yuko Takeo, Wes Goodman, Andrew Reierson, Netty Idayu Ismail, Neil Denslow, Emma O'Brien, and David Goodman