Treasuries and the dollar weakened while U.S. debt insurance costs climbed to the highest level in more than a year after Moody’s Investors Service said America may lose its Aaa rating. European stocks and Italian bonds declined as gold rose to a record for a second day.
The 10-year Treasury yield added two basis points to 2.90 percent at 7:15 a.m. in New York, and the Dollar Index retreated 0.2 percent. Credit-default swaps on U.S. debt jumped 7.5 basis points to 58, the highest since February 2010, according to CMA. Italy’s 10-year yield rose 17 basis points after a debt sale. The Stoxx Europe 600 Index lost 0.9 percent. Futures on the Standard & Poor’s 500 Index added 0.2 percent after JPMorgan Chase & Co. reported earnings. Gold advanced to an all-time high of $1,594.45 an ounce.
Moody’s began its first U.S. review since the mid-1990s as talks to raise the $14.3 trillion debt limit stall, reflecting concern political gridlock will lead to a default. Federal Reserve Chairman Ben S. Bernanke will testify for a second day before lawmakers after saying yesterday he’s prepared to provide more stimulus if needed. Italy’s Senate votes on budget cuts to tame Europe’s second-largest debt burden.
“There’s uncertainty and confusion about whether we are going to see executives and legislators settle on the debt limit and the Moody’s review suggests that there may be a problem if they cannot reach a deal,” said Tim Leung, who manages about $1.5 billion at IG Investment Ltd. in Hong Kong.
Dollar, Yen
The dollar weakened 0.3 percent versus the Swiss franc. The New Zealand dollar strengthened against all 16 major peers monitored by Bloomberg after a report showed manufacturing and farming led the fastest quarterly growth in more than a year, spurring speculation the central bank will raise interest rates this year.
The yield on the 30-year Treasury bond climbed three basis points to 4.21 percent before the U.S. sells $13 billion of the securities, the last of three auctions this week totaling $66 billion.
The yield on the Spanish 10-year bond rose 12 basis points, driving the premium investors demand to hold the debt instead of benchmark German bunds 16 basis points higher to 323 basis points. The Portuguese two-year yield jumped six basis points. Italy’s five-year note yield rose seven basis points to 5.10 percent after the government sold almost 5 billion euros ($7.1 billion) of debt.
Daily Mail
More than seven stocks fell for every one that advanced in the Stoxx 600. Software AG, Germany’s second-biggest maker of business software, plunged 13 percent after reporting a decline in sales. Daily Mail & General Trust Plc lost 5.8 percent as the publisher of the Daily Mail newspaper said advertising revenue fell.
The S&P 500 gained yesterday, snapping a three-day decline. JPMorgan rose 1.5 percent in pre-market trading after the second-largest U.S. bank said net income increased 13 percent last quarter, beating analysts’ estimates. Google Inc., the biggest Internet search company, will release results after markets close.
A report at 8:30 a.m. in Washington may show retail sales fell 0.1 percent in June after a 0.2 percent May decrease, according to the median forecast of 79 economists surveyed by Bloomberg News. Other data might show wholesale prices dropped last month and initial claims for jobless benefits declined to 415,000 last week from 418,000 in the prior period.
Soybeans rose for the ninth consecutive day, the longest streak since August, advancing 0.4 percent. Silver futures jumped 1.2 percent to $38.595 an ounce after jumping 7.1 percent yesterday.
To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net.
To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net
