Treasuries surged, sending five-year yields to a record low, while the yen reached a 15-year high versus the dollar as a report showing a drop in private U.S. payrolls fueled speculation the Federal Reserve will buy more bonds to bolster the recovery. Most U.S. stocks retreated.
The five-year Treasury note’s yield slid to as low as 1.12 percent as of 4 p.m. in New York. The yen strengthened as much as 0.5 percent to 82.77 per dollar. The Standard & Poor’s 500 Index slipped 0.1 percent to 1,159.97 a day after surging to its highest close since May. About four stocks fell for every three that rose on U.S. exchanges. Gold and tin climbed to records while copper reached a 27-month high.
The unexpected 39,000 drop in private payrolls reported by ADP Employer Services undermined confidence in the economic recovery after a report yesterday showed service industries grew more than forecast, triggering a rally in stocks. Goldman Sachs Group Inc. said the U.S. economy likely will be “fairly bad” or “very bad” over the next six to nine months and the International Monetary Fund cut its global growth forecast.
“The ADP number is a short-term reminder that all is not well in the real economy,” said Liam Dalton, president of Axiom Capital Management Inc. in New York, which oversees $1.4 billion.
The S&P 500 surged 2.1 percent yesterday after the Institute for Supply Management said U.S. service industries expanded more than forecast and speculation grew that the Federal Reserve will join Japan’s efforts to stoke economic growth.
Technology Shares Drag
Technology companies were the biggest drag on the index today, with Citrix Systems Inc. tumbling 14 percent. Equinix Inc. plunged 33 percent after the operator of Internet data centers said third-quarter sales were no more than $330 million, trailing analysts’ estimates. General Electric Co. led the Dow Jones Industrial Average to a gain after agreeing to buy oilfield-equipment maker Dresser Inc. for $3 billion.
The ADP report came two days before the Labor Department’s monthly payrolls data, which is forecast to show companies added 75,000 jobs in September. The median estimate of 37 economists surveyed by Bloomberg News called for the ADP report to show a gain of 20,000 jobs.
Alcoa Inc. will unofficially start the U.S. earnings season tomorrow as the first Dow Jones Industrial Average company to report results. Analysts forecast that S&P 500 earnings increased 23 percent in the third quarter and will grow 31 percent in the current period.
Treasury Yields
The two-year Treasury yield also decreased to a record low, falling 2 basis points to 0.3750 percent. The 10-year yield lost as many as 12 basis points to 2.36 percent, the lowest since January 2009.
The difference between the yield on 10-year notes and 30- year bonds reached 1.32 percentage points, the highest level since Bloomberg began keeping the data in 1992, as investors bet the Fed would focus its purchases on shorter-term Treasury securities.
Speculation that the Fed will act to revive the U.S. economy through quantitative easing is growing after Japan this week said it would buy as much as $60 billion of assets as part of stimulus measures.
In the past week, New York Fed Bank President William Dudley, the Boston Fed’s Eric Rosengren and Chicago’s Charles Evans have advocated further Fed action to stoke the economy. Dudley’s Oct. 1 speech was “a strong signal” that the central bank will restart asset purchases at its next meeting on Nov. 2- 3, according to Goldman Sachs economist Edward McKelvey.
Fed Purchases
The Fed snapped up $300 billion of Treasuries last year. It purchased $2.069 billion of Treasuries maturing from March 2013 to June 2013 today as part of a program to reinvest principal payments on its mortgage holdings into government debt to prevent money from being drained out of the financial system. The central bank has bought $44.071 billion of Treasuries since it began the program on Aug. 17.
The Stoxx Europe 600 Index rose 0.5 percent as three shares gained for every one that fell. Basic-resources stocks led gains as copper producer Antofagasta Plc surged 3.5 percent and Anglo American Plc jumped 4.2 percent.
Greece’s ASE Index rallied 3.3 percent, the most of 18 western European benchmark gauges, as the nation’s banks advanced. National Bank of Greece SA, the biggest Greek lender, climbed 6.8 percent, a fourth straight gain.
The MSCI Asia Pacific Index jumped 1.7 percent to a two- year high.
Emerging Markets
The MSCI Emerging Markets Index climbed for a sixth day, reaching the highest level since June 2008, and benchmark equity gauges in Turkey and the Philippines jumped to records. Developing-nation currencies appreciated, sending the Bloomberg- JPMorgan Asia Dollar Index to the highest level since April 2008. South Korea’s won rose 0.7 percent against the U.S. currency to a five-month high while the Russian ruble advanced 0.8 percent, its fourth day of gains.
Wall Street economists are reviving a bet that the global economy will withstand the U.S. slowdown. Just three years since America began dragging the world into its deepest recession in seven decades, Goldman Sachs, Credit Suisse Holdings USA Inc. and BofA Merrill Lynch Global Research are forecasting that this time will be different. Goldman Sachs predicts worldwide growth will slow 0.2 percentage point to 4.6 percent in 2011, even as expansion in the U.S. falls to 1.8 percent from 2.6 percent.
Decoupling
Underpinning their analysis is the view that international reliance on U.S. trade has diminished and is too small to spread the lingering effects of America’s housing bust.
German two-year notes rose, sending the yield down 3 basis points to 0.77 percent. The government sold 4.12 billion euros of the 0.75 percent securities due September 2012 at an average yield of 0.76 percent. Investors bid for 2.2 times the securities offered, compared with a bid-to-cover ratio of 1.7 times at a previous sale on Sept.8. Portugal auctioned 1 billion euros of three- and 12-month bills, with the securities due in January drawing an average yield of 1.595 percent.
The unexpected decision by the Japanese central bank yesterday to drop its interest rate to “virtually zero” and expand its balance sheet followed the Fed’s move toward more unconventional easing. Bank of England officials will consider further stimulus tomorrow, while the central banks of Australia, Canada and New Zealand are among those now holding fire on further interest-rate increases.
The S&P GSCI Index of commodities advanced 0.4 percent to a two-year high as the weaker U.S. currency pushed up prices of dollar-denominated materials. The dollar slumped against 12 of 16 major peers and the Dollar Index, which gauges the U.S. currency against six major trading partners, dropped 0.4 percent to 77.407, the lowest level since January.
Record Gold
Gold climbed to a record for the 13th session since Sept. 14, climbing as much as 0.8 percent to $1,351 an ounce in New York. Silver rose to the highest since September 1980, increasing to as high as $23.17 an ounce. Copper gained 0.7 percent to close at $3.753 a pound and touched $3.7895, the highest price for a most-active contract since July 2008.
Orange-juice futures plunged the most since July on expectations for a bigger citrus crop in Florida, the world’s largest grower after Brazil. Florida’s harvest may jump 13 percent to 150.7 million boxes as groves recover from a freeze in January, according the average estimate of six analysts in a Bloomberg News survey. The U.S. Department of Agriculture will release its first estimate for this season’s crop on Oct. 8.
Orange-juice for November delivery fell 8.05 cents, or 5.1 percent, to settle at $1.5045 a pound on ICE Futures U.S. in New York, the biggest decline since July 8.
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The unexpected 39,000 drop in private payrolls reported by ADP Employer Services undermined confidence in the economic recovery after a report yesterday showed service industries grew more than forecast, triggering a rally in stocks. Goldman Sachs Group Inc. said the U.S. economy likely will be “fairly bad” or “very bad” over the next six to nine months and the International Monetary Fund cut its global growth forecast.
“The ADP number is a short-term reminder that all is not well in the real economy,” said Liam Dalton, president of Axiom Capital Management Inc. in New York, which oversees $1.4 billion.
The S&P 500 surged 2.1 percent yesterday after the Institute for Supply Management said U.S. service industries expanded more than forecast and speculation grew that the Federal Reserve will join Japan’s efforts to stoke economic growth.
Technology Shares Drag
Technology companies were the biggest drag on the index today, with Citrix Systems Inc. tumbling 14 percent. Equinix Inc. plunged 33 percent after the operator of Internet data centers said third-quarter sales were no more than $330 million, trailing analysts’ estimates. General Electric Co. led the Dow Jones Industrial Average to a gain after agreeing to buy oilfield-equipment maker Dresser Inc. for $3 billion.
The ADP report came two days before the Labor Department’s monthly payrolls data, which is forecast to show companies added 75,000 jobs in September. The median estimate of 37 economists surveyed by Bloomberg News called for the ADP report to show a gain of 20,000 jobs.
Alcoa Inc. will unofficially start the U.S. earnings season tomorrow as the first Dow Jones Industrial Average company to report results. Analysts forecast that S&P 500 earnings increased 23 percent in the third quarter and will grow 31 percent in the current period.
Treasury Yields
The two-year Treasury yield also decreased to a record low, falling 2 basis points to 0.3750 percent. The 10-year yield lost as many as 12 basis points to 2.36 percent, the lowest since January 2009.
The difference between the yield on 10-year notes and 30- year bonds reached 1.32 percentage points, the highest level since Bloomberg began keeping the data in 1992, as investors bet the Fed would focus its purchases on shorter-term Treasury securities.
Speculation that the Fed will act to revive the U.S. economy through quantitative easing is growing after Japan this week said it would buy as much as $60 billion of assets as part of stimulus measures.
In the past week, New York Fed Bank President William Dudley, the Boston Fed’s Eric Rosengren and Chicago’s Charles Evans have advocated further Fed action to stoke the economy. Dudley’s Oct. 1 speech was “a strong signal” that the central bank will restart asset purchases at its next meeting on Nov. 2- 3, according to Goldman Sachs economist Edward McKelvey.
Fed Purchases
The Fed snapped up $300 billion of Treasuries last year. It purchased $2.069 billion of Treasuries maturing from March 2013 to June 2013 today as part of a program to reinvest principal payments on its mortgage holdings into government debt to prevent money from being drained out of the financial system. The central bank has bought $44.071 billion of Treasuries since it began the program on Aug. 17.
The Stoxx Europe 600 Index rose 0.5 percent as three shares gained for every one that fell. Basic-resources stocks led gains as copper producer Antofagasta Plc surged 3.5 percent and Anglo American Plc jumped 4.2 percent.
Greece’s ASE Index rallied 3.3 percent, the most of 18 western European benchmark gauges, as the nation’s banks advanced. National Bank of Greece SA, the biggest Greek lender, climbed 6.8 percent, a fourth straight gain.
The MSCI Asia Pacific Index jumped 1.7 percent to a two- year high.
Emerging Markets
The MSCI Emerging Markets Index climbed for a sixth day, reaching the highest level since June 2008, and benchmark equity gauges in Turkey and the Philippines jumped to records. Developing-nation currencies appreciated, sending the Bloomberg- JPMorgan Asia Dollar Index to the highest level since April 2008. South Korea’s won rose 0.7 percent against the U.S. currency to a five-month high while the Russian ruble advanced 0.8 percent, its fourth day of gains.
Wall Street economists are reviving a bet that the global economy will withstand the U.S. slowdown. Just three years since America began dragging the world into its deepest recession in seven decades, Goldman Sachs, Credit Suisse Holdings USA Inc. and BofA Merrill Lynch Global Research are forecasting that this time will be different. Goldman Sachs predicts worldwide growth will slow 0.2 percentage point to 4.6 percent in 2011, even as expansion in the U.S. falls to 1.8 percent from 2.6 percent.
Decoupling
Underpinning their analysis is the view that international reliance on U.S. trade has diminished and is too small to spread the lingering effects of America’s housing bust.
German two-year notes rose, sending the yield down 3 basis points to 0.77 percent. The government sold 4.12 billion euros of the 0.75 percent securities due September 2012 at an average yield of 0.76 percent. Investors bid for 2.2 times the securities offered, compared with a bid-to-cover ratio of 1.7 times at a previous sale on Sept.8. Portugal auctioned 1 billion euros of three- and 12-month bills, with the securities due in January drawing an average yield of 1.595 percent.
The unexpected decision by the Japanese central bank yesterday to drop its interest rate to “virtually zero” and expand its balance sheet followed the Fed’s move toward more unconventional easing. Bank of England officials will consider further stimulus tomorrow, while the central banks of Australia, Canada and New Zealand are among those now holding fire on further interest-rate increases.
The S&P GSCI Index of commodities advanced 0.4 percent to a two-year high as the weaker U.S. currency pushed up prices of dollar-denominated materials. The dollar slumped against 12 of 16 major peers and the Dollar Index, which gauges the U.S. currency against six major trading partners, dropped 0.4 percent to 77.407, the lowest level since January.
Record Gold
Gold climbed to a record for the 13th session since Sept. 14, climbing as much as 0.8 percent to $1,351 an ounce in New York. Silver rose to the highest since September 1980, increasing to as high as $23.17 an ounce. Copper gained 0.7 percent to close at $3.753 a pound and touched $3.7895, the highest price for a most-active contract since July 2008.
Orange-juice futures plunged the most since July on expectations for a bigger citrus crop in Florida, the world’s largest grower after Brazil. Florida’s harvest may jump 13 percent to 150.7 million boxes as groves recover from a freeze in January, according the average estimate of six analysts in a Bloomberg News survey. The U.S. Department of Agriculture will release its first estimate for this season’s crop on Oct. 8.
Orange-juice for November delivery fell 8.05 cents, or 5.1 percent, to settle at $1.5045 a pound on ICE Futures U.S. in New York, the biggest decline since July 8.
http://jodnet.blogspot.com
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