BLBG: Treasuries Gain on Data as Europe Stocks Fall, Crops Rise
Treasuries rose after orders for U.S. durable goods fell more than forecast in July. European stocks and U.S. equity-index futures stayed lower, while crops led commodities higher.
The yield on 10-year Treasuries dropped three basis points to 2.79 percent at 8:41 a.m. in New York. The Stoxx Europe 600 Index slid 0.3 percent to 303.84. Standard & Poor’s 500 Index futures slipped less than 0.1 percent, after climbing as much as 0.3 percent. The S&P GSCI Index of 24 raw materials climbed to a one-month high, with corn and soybeans both surging more than 3.5 percent as hot, dry weather in the Midwest threatened to curb U.S. crop prospects. Turkey’s lira slid as much as 0.6 percent to a record against the dollar and India’s rupee sank 1.5 percent.
Durable goods orders in the U.S. fell for the first month since March after a report last week showed new home purchases plunged by the most in three years. European Central Bank Governing Council membersPanicos Demetriades and Ewald Nowotny split over whether scope remains for further interest-rate cuts, while three regional Federal Reserve presidents differed over the timing for reducing bond buying as central bankers met over the weekend in Jackson Hole, Wyoming.
“On the one hand you want to see an improvement in the economy but if it does improve too much, tapering is back on the agenda,” Andreas Nigg, head of equity and commodity strategy at Vontobel Asset Management in Zurich, said in a telephone interview. “This is a dilemma for the markets. The best scenario is moderate growth. Durable goods numbers can be volatile and fluctuate a lot.”
Fed Survey
Stocks, bonds and commodities have been whipsawed since May, when Fed Chairman Ben S. Bernanke first signaled the prospect of cuts to stimulus should the economy and job market continue to improve. The Fed will probably pare its $85 billion a month in bond purchases at its Sept. 17-18 meeting, according to 65 percent of economists surveyed by Bloomberg Aug. 9-13.
The ECB still can’t rule out lowering the benchmark rate from the record low of 0.5 percent, Bank of Cyprus Governor Demetriades said in an Aug. 24 interview. Bank of Austria Governor Nowotny said on Aug. 22 that he doesn’t see “many arguments now for a rate cut” after the recent “stream of good news.”
Three shares declined for every one that gained in the Stoxx 600 as volume was 50 percent lower than the 30-day average. U.K. markets were shut for a holiday.
Royal KPN NV (KPN) increased 3 percent in Amsterdam after winning the support of minority shareholder America Movil SAB for the sale of its German business to Telefonica Deutschland Holding AG (O2D) after the acquirer agreed to sweeten its bid.
Durable Goods
The S&P 500 (SPX) advanced 0.5 percent last week. Bookings for goods meant to last at least three years decreased 7.3 percent, the most since August 2012, after a 3.9 percent gain in June, the Commerce Department said today in Washington. The median forecast of economists surveyed by Bloomberg called for a 4 percent drop.
Price gains of stocks in the S&P 500 are outpacing profits by the fastest rate in 14 years as the bull market extends beyond the average length of rallies since 1946. The benchmark gauge for U.S. equities has risen 14 percent relative to income over the past 12 months to 16 times earnings, according to data compiled by Bloomberg. Valuations last climbed this fast in the final year of the 1990s technology bubble, just before the index began a 49 percent tumble.
The MSCI Emerging Markets Index increased 0.4 percent. About $1.4 trillion has been erased from the value of emerging-market equities since Bernanke said May 22 that policy makers could scale back bond buying.
Crop Forecast
Soybeans gained 3.9 percent after climbing as much as 4.6 percent, and corn advanced as much as 4.7 percent. The harvest is expected to be 13.46 billion bushels, less than the 13.76 billion estimated by the U.S. Department of Agriculture, Pro Farmer said Aug. 23.
West Texas Intermediate crude lost 0.2 percent to $106.27 a barrel. Gold was little changed at $1,397.36 an ounce.
The dollar weakened for the first time in four days against the yen, slipping 0.4 percent.
Italian 10-year yields rose six basis points to 4.39 percent and Spain’s rate increased two basis points to 4.48 percent.
To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net; Stephen Kirkland in London at skirkland@bloomberg.net;
To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net
