BLBG:Treasuries Gain as Japan Stocks Decline Before Payrolls Report
Treasuries rose, heading for their first weekly gain since April, as Japanese stocks fell and economists said a government report today will show the job growth slowed last month.
U.S. government securities were poised to beat stocks globally for a third week. Treasuries handed investors a loss of 0.6 percent since May 17, according to the Bloomberg U.S. Treasury Bond Index. (BUSY) The MSCI All-Country World Index of shares dropped 3.9 percent including reinvested dividends, data compiled by Bloomberg show. A gauge of investor concern in financial markets was close to a nine-month high.
“Because of market volatility, people are going back to safe assets,” said Genzo Kimura, an investor in Tokyo at Sumitomo Mitsui Trust, which oversees the equivalent of $43.6 billion. “The U.S. Treasury is a safe asset.”
The benchmark 10-year yield declined two basis points, or 0.02 percentage point, to 2.06 percent at 8:47 a.m. London time, according to Bloomberg Bond Trader prices. The 1.75 percent security maturing in May 2023 rose 5/32, or $1.56 per $1,000 face amount, to 97 7/32.
Japan’s Topix Index (TPX) slid 1.3 percent, a third straight loss, and the MSCI Asia Pacific Index dropped 0.3 percent.
Bank of America Corp.’s market risk index covering global equities, commodities, bonds and currencies was negative 0.47 yesterday, matching the highest level since August. It is still less than the average for the past decade, which is about zero.
Job Growth
The U.S. economy added 163,000 jobs in May, versus 165,000 in April, based on a Bloomberg News survey before the Labor Department report at 8:30 a.m. in Washington. Gains have slowed after a 332,000 increase in February. The unemployment rate will hold at a four-year low of 7.5 percent, a separate survey shows.
Treasuries tumbled after the previous jobs report May 3, when the gain of 165,000 for April topped the forecast of 140,000 projected by the Bloomberg survey. The Labor Department revised March’s jobs gain to 138,000 from 88,000. The jobless rate unexpectedly declined. Ten-year yields jumped 11 basis points and 30-year yields advanced 13 basis points.
The opposite happened on April 5 when the employment gain was less than analysts predicted. Thirty-year yields fell 11 basis points, their steepest decline in the past year.
Volatility in Treasuries as measured by the Bank of America Merrill Lynch MOVE index climbed to 84.75 yesterday, the highest in almost a year. It has averaged 62.5 in the past 12 months.
To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
