BLBG:Indian Shares Fall Emerging Currencies; Silver Decreases
Treasuries extended the biggest weekly gain in two months and European stocks swung between gains and losses. Emerging markets shares declined led by India and gold dropped for the first time in three days.
U.S. 10-year yields fell 2 basis points to 2.74 percent at 9:39 a.m. in London. The Stoxx Europe 600 Index gained less than 0.1 percent while Standard & Poor’s 500 Index futures dropped less than 0.1 percent. Turkey’s lira is poised for the biggest weekly gain since 2011. Gold declined 0.7 percent and silver retreated 1.6 percent.
Kansas City Federal Reserve Bank President Esther George, Minneapolis Fed President Narayana Kocherlakota and St. Louis Fed President James Bullard will give speeches today after the U.S. central bank under Ben S. Bernanke unexpectedly refrained from reducing monetary stimulus. India raised its benchmark interest rate for the first time since 2011 today. Germany holds elections on Sunday to decide whether Chancellor Angela Merkel wins a third term.
“We have been looking for a downward correction in Treasury yields,” said Marius Daheim, a senior fixed-income strategist at Bayerische Landesbank in Munich. “The economic assessment that Bernanke gave us this week seems to be warranting more caution regarding the short-term outlook for the U.S. economy. Our economists are saying tapering will now start in December, when we might see yields grinding upwards again.”
Treasury Rally
Treasury 10-year note yields fell 15 basis points this week, the most since the five days through July 12, as the Fed said it needed more evidence of a lasting improvement in the economy before scaling back stimulus. Yields on the securities, the benchmark for loans ranging from mortgages to corporate bonds, climbed to a two-year high of 3.01 percent on Sept. 6 from 1.93 percent on May 21, the day before Bernanke said the central bank could slow the pace of asset purchases in the next few policy meetings.
The euro was little changed at $1.3527, ending a four-day run of gains. It slipped 0.2 percent to 134.34 yen.
An INSA opinion poll in Germany published yesterday showed the opposition Social Democrats climbing one percentage point to 28 percent, 10 points behind Merkel’s Christian Democratic-led group. Both main parties fell short of a majority with their preferred coalition partners in the poll.
Public Offering
The Stoxx 600 climbed 1.2 percent this week, heading for a third weekly advance. Adidas AG (ADS) fell 4.2 percent today as the world’s second-largest maker of sporting goods cut its profit forecast. Direct Line Insurance Group Plc (DLG) retreated 2.5 percent as Royal Bank of Scotland Group Plc sold a 630 million-pound ($1 billion) stake in the U.K. insurer. Foxtons Group Plc surged 22 percent in London on the real estate broker’s first day of trading after its initial public offering.
Futures on the S&P 500 (SPX) expiring in December slipped less than 0.1 percent. The U.S. gauge rallied 2 percent this week, heading for the biggest gain in two months.
The MSCI Emerging Markets Index fell from a four-month high, dropping less than 0.1 percent to 1,022.15, led by Indian shares. (SENSEX) The gauge rose 3.6 percent this week, the best performance since the end of June. The measure’s 14-day relative strength index was at 76, its fifth day above the 70 level that indicates to some analysts a security is overbought and poised to decline.
India’s Sensex
India’s benchmark Sensex Index tumbled 2.2 percent, the steepest drop in more than two weeks, after central bank Governor Raghuram Rajan surprised analysts by raising the benchmark interest rate in his first policy review. Lenders led the decline, with ICICI Bank Ltd. tumbling 5.2 percent. The rupee slid 0.5 percent against the dollar, reducing this week’s gain to 2.3 percent.
Rajan, who took office two weeks ago, boosted the repurchase rate by a quarter point to 7.5 percent. All 36 analysts in a Bloomberg News survey predicted no change.
Markets in China, Hong Kong, South Korea and Taiwan were shut for holidays.
Turkey’s lira weakened 0.2 percent to 1.9633 against the dollar, trimming this week’s rally to 3.2 percent, the steepest gain since October 2011.
Gauges of credit-default swaps on companies in Europe and Japan rolled into their 20th series. The 21st version of the Markit CDX North America Investment-Grade Index also opens today, while the new Markit iTraxx Asia ex-Japan series starts Sept. 23. New benchmarks are created every six months when companies are added or dropped depending on their ratings, cost of protection and ease of trading.
Investment Grade
Contracts on the Markit iTraxx Crossover Index of credit-default swaps linked to 50 companies with mostly high-yield credit ratings cost 392 basis points in London, according to data compiled by Bloomberg. That compares with 364 basis points for Series 19 at the close yesterday. The Markit iTraxx Europe index of 125 companies with investment-grade ratings was at 99 basis points, compared with 89 yesterday.
Five constituents changed in Europe’s investment-grade benchmark and four in the high-yield measure. Constituents of the financial gauges didn’t change.
Silver declined to $22.7025 an ounce and gold fell to $1,356.60 an ounce. West Texas Intermediate oil dropped less than 0.1 percent to $106.32 a barrel after decreasing 1.6 percent yesterday as Libya’s oil production expanded and President Bashar al-Assad said Syria will make information about its chemical weapons available.
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net
