Yen, Dollar
The Institute for Supply Management-Chicago Inc.’s business barometer eased to 55 this month from 56.5 in August, according to the median forecast of economists surveyed. Readings greater than 50 signal growth. The University of Michigan’s final confidence index for the month was probably 57.8, unchanged from a preliminary reading issued two weeks ago and up from August’s 55.7, the lowest since November 2008.
The yen climbed 0.7 percent against the euro, with the Dollar Index, which tracks the U.S. currency against those of six trading partners, gaining 0.6 percent. The Japanese and U.S. currencies are the best performers this quarter among the 10 tracked by Bloomberg Correlation-Weighted Currency Indexes, gaining 12 percent and 6.7 percent, respectively.
Japan’s factory output increased 0.8 percent in August from July, the trade ministry said in Tokyo today, missing the 1.5 percent median estimate of 28 economists surveyed by Bloomberg News. South Korean industrial production rose 4.8 percent from a year earlier, trailing the median 6.1 percent gain forecast in a separate Bloomberg survey. The won weakened 0.4 percent to 1,178.10 per dollar, completing its largest monthly loss since February 2009.
‘Risk-Off Prevails’
The New Zealand dollar fell 0.9 percent against the greenback, on course for a second weekly loss. The nation’s sovereign credit rating was cut by one level to AA by Fitch Ratings and to AA from AA+ by Standard & Poor’s. Its benchmark 10-year yield climbed 11 basis points to 4.42 percent.
“People are still very uncertain about the macro-economic outlook at this stage and risk off prevails until greater certainty comes to light in policy response,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “Expectations are now at a much more realistic level moving forward given the ongoing concerns about sovereign-debt bailouts and lack of self-sustaining growth in major economies.”
Gold Advances
Treasury 10-year yields fell five basis points to 1.95 percent, with the yield on the German bund declining 10 basis points. Belgian two-year notes climbed for the eighth consecutive day, the longest run of gains since March 2010, with the yield dropping eight basis points today.
Gold climbed to $1,623.35 an ounce, heading for the 12th consecutive quarterly gain. Thailand, Bolivia and Tajikistan increased their gold reserves in August, according to data from the International Monetary Fund.
Oil fell about 1 percent to $81.36 a barrel in New York.
The MSCI Emerging Markets Index dropped 1.6 percent, heading for the biggest monthly retreat since October 2008. China’s Shanghai Composite Index slipped 0.3 percent to the lowest level since April 2009, while Russia’s Micex Index sank 3.4 percent. The ruble weakened 1 percent against the dollar and South Africa’s rand depreciated 1.6 percent.
Investor Withdrawals
The Kenyan shilling fell as much as 0.8 percent, heading for its biggest quarterly slump in 12 years, after data yesterday showed the economy contracted and inflation accelerated. Nigeria’s naira dropped for a fifth day, falling 0.3 percent to the weakest level on a closing basis since at least 1994.
Emerging-market equity funds posted a ninth week of outflows, with investors withdrawing a net $2.6 billion in the week ended Sept. 28, compared with $1.4 billion the previous week, Citigroup Inc. said, citing figures from EPFR Global.
Credit-default swaps insuring Chinese government bonds jumped 18 basis points to 198, the highest level since March 2009, according to CMA. The cost of insuring European corporate debt snapped five days of declines. The Markit iTraxx Crossover Index of credit-default swaps on 50 mostly junk-rated companies rose 32 basis points to 830.5, according to JPMorgan Chase & Co.
To contact the reporters on this story: Daniel Tilles in London at dtilles@bloomberg.net; Shiyin Chen in Singapore at schen37@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net
