Treasuries, Dollar Rise While Stocks, Commodities Prices Slump
Dec. 7 (Bloomberg) -- Treasuries advanced, the dollargained versus the euro while stocks, gold and oil declined afterFederal Reserve Chairman Ben S. Bernanke said the U.S. economyfaces “significant headwinds” and inflation “could move lower.”
Two-year Treasury notes rose, driving their yield downseven basis points to 0.76 percent at 4 p.m. in New York. Thedollar rose 0.3 percent to $1.4817 per euro and earlierappreciated to the strongest level since Nov. 4. The Standard &Poor’s 500 Index lost 0.3 percent, reversing a 0.4 percent gain.Gold futures slumped 0.5 percent in New York, giving the metalthe steepest two-day drop since October 2008. Crude slumped to$73.93 a barrel in its fourth straight decline.
Investors sold riskier assets after Bernanke said the U.S.economy’s expansion will be limited by a weak labor market andtight credit. He has led the most aggressive monetary stimulusin U.S. history, expanding the Fed’s balance sheet by $1trillion and cutting the benchmark lending rate a year ago closeto zero. Today, Bernanke said inflation may subside furtherbecause of the unemployment rate, which has increased to 10percent for the first time since 1983.
“It’s reasonable to expect investors to become more riskaverse,” said Eric Teal, who helps oversee $5 billion at FirstCitizens BancShares Inc. in Raleigh, North Carolina. “Some ofthe bullishness of the last few months will probably abatebefore the economic recovery becomes more sustainable.”
Surge Since March
The S&P 500 has surged 63 percent since March 9, thesteepest advance since the Great Depression, while gold and oiljumped and the dollar weakened, spurred by record-low interestrates and $12 trillion in spending by governments worldwide.
After the 10 industry groups in the stock index postedgains ranging between 28 percent and 134 percent since March,the measure was valued at 22.2 times the reported operatingearnings at its companies from the past year, the most expensivelevel since 2002, according to data compiled by Bloomberg.
Traders in the U.S. equity options market are girding forlosses in the S&P 500, unconvinced by forecasts for the fastestU.S. earnings growth in 15 years. S&P 500 options to protectagainst declines in stocks over the next year cost 22 percentmore than one-month contracts at the end of last week, thehighest since 1999, data compiled by London-based Barclays Plcand Bloomberg show.
‘Precarious Position’
“We’re in a precarious position because we’ve had so muchstrength in so many sectors, some of which has been rational andsome of which has been slightly irrational,” said Liam Dalton,who oversees about $1.4 billion as the New York-based chiefexecutive officer of Axiom Capital Management. “But we’re out ofthe phase where the market dynamic is strong on the upside.”
The difference between Treasury 2- and 10-year yieldsreached the most since July before the U.S. sells $74 billion innotes and bonds in three auctions beginning tomorrow. The payouton the benchmark 10-year note fell four basis points to 3.43percent.
The dollar appreciated against 14 of the 16 most-activecurrencies. The yen gained versus all of them, on speculationJapanese exporters took advantage of its biggest weekly dropsince 1999 to buy the currency.
U.S. stocks declined as investor speculated the economyisn’t growing fast enough to shield banks from losses oncommercial real estate. Financial shares in the S&P 500retreated 1.6 percent, as Wells Fargo & Co. and JPMorgan Chase &Co. lost more than 1 percent. Exxon Mobil Corp. fell 0.7 percenton crude’s slump.
Gold, Oil
Gold futures for February delivery have now lost 4.5percent since Dec. 3, closing at $1,164 an ounce in New Yorktoday. Crude oil futures expiring in January lost 2 percent.
Stocks in emerging markets dropped. The Dubai FinancialMarket General Index sank the most among benchmark equityindexes worldwide. The measure has tumbled 17 percent sinceDubai announced on Nov. 25 that state-owned Dubai World wouldask creditors for a “standstill” agreement on its debt,including property company Nakheel PJSC’s $3.5 billion bond duefor repayment in a week.
To contact the reporter on this story:Nick Baker at nbaker7@bloomberg.net.
Last Updated: December 7, 2009 16:39 ESTSource: Bloomberg
« Back to Business News
Related News
-
Stocks, Commodities Rise on Dubai, China; Dollar Weakens Dec 7, 2009 @ 02:20 PM
Dec. 1 (Bloomberg) -- Stocks rallied from Shanghai to NewYork and the dollar slid as Dubai World said it’s in talks torestructure less than half its debt and Chinese manufacturinggrew at the fastest pace in five years. Treasury 10-year notesdropped for the first time in six days.
-
US Stocks, Commodities Decline as Bonds Gain on Dubai Crisis Dec 7, 2009 @ 02:20 PM
Nov. 27 (Bloomberg) -- U.S. and emerging-market stocksslumped and commodities dropped as Dubai’s attempt to delay debtrepayments unnerved investors. Treasuries and the dollar rosewhile credit-default swaps surged.
-
US Markets Wrap: Stocks, Commodities Slide as Dollar Rebounds Dec 7, 2009 @ 02:20 PM
Oct. 26 (Bloomberg) -- U.S. stocks slid, erasing an earlyrally, on concern lawmakers will phase out a tax credit forhomebuyers and Bank of America Corp. will have to sell shares topay back its government bailout. The dollar rebounded from a 14-month low against the euro and oil wiped out an early advance.
-
US Markets Wrap: Stocks, Dollar, Treasuries, Gold Increase Dec 7, 2009 @ 02:20 PM
Oct. 7 (Bloomberg) -- U.S. stocks rose for a third day asbanks climbed on an analyst upgrade of Bank of America Corp. andWells Fargo & Co.’s plan to boost credit card rates. The dollarand Treasuries gained, and gold hit a record.
-
Asian Stocks Fall Amid Valuation Concerns; Honda Drops on Yen Dec 7, 2009 @ 02:20 PM
Sept. 14 (Bloomberg) -- Asian stocks fell, dragging theMSCI Asia Pacific Index from a one-year high, amid concern asix-month rally had overvalued prospects for an earningsrecovery in the region.
