BLBG: Dollar Weakens as Bond Rout Abates While S&P 500 Futures Climb
The dollar slipped to the lowest level in almost four months against major peers, while Treasuries halted their slide and European bonds fluctuated amid a selloff that’s wiped more than $400 billion from global markets. U.S. equity-index futures rose and crude oil declined.
The Bloomberg Dollar Spot Index retreated 0.4 percent by 10:20 a.m. in London. The yield on 10-year Treasuries fell three basis points to 2.26 percent and German bunds swung between gains and losses. Standard & Poor’s 500 Index futures rose 0.4 percent while the Stoxx Europe 600 Index was little changed. Oil fell 0.5 percent to $60.19 a barrel in New York. Russia’s ruble weakened 1.6 percent as the central bank sold the currency for the first time since allowing it to trade freely in November.
The dollar is heading for a fifth weekly decline, the longest streak since October 2013, amid signs the U.S. economy is struggling to gather strength, bolstering the case for keeping interest rates lower for longer. Retail sales stagnated in April, a Commerce Department report showed on Wednesday, before data today on jobless claims. The U.S. will sell 30-year bonds after its 10-year offering yesterday attracted the most demand from investment funds and foreign central banks since 2011.
“It is really all about dollar weakness across the board today as markets are still digesting the U.S. retail sales data we saw yesterday,” said Keng Goh, a foreign-exchange strategist at Royal Bank of Canada in London. The central theme of the Federal Reserve increasing rates in September hasn’t yet changed but “no doubt some of the weakness in the data will probably diminish that conviction a little bit,” Goh said.
Kiwi Gains
The dollar fell 0.7 percent to $1.1433 per euro, the weakest level since Feb. 19. The yen was at 119.20 per dollar.
The kiwi climbed for a third day, rising to as high as 75.61 U.S. cents after New Zealand’s retail sales expanded 2.7 percent in the first quarter, beating the 1.6 percent projected by economists.
German bunds were little changed at 0.726 percent, more than 14 times higher than the record low of 0.049 percent less than one month ago.
Treasuries Rise
Yields on 30-year Treasuries retreated two basis points to 3.07 percent after surging seven basis points Wednesday. The U.S. plans to sell $16 billion of similar-maturity securities today.
Commodity producers and automakers in the Stoxx 600 fell the most among 19 industry groups. Greece’s ASE Index dropped 0.6 percent, the biggest decline among western-European markets.
Salvatore Ferragamo SpA, the Italian luxury-shoemaker, slid 3.4 percent after sales excluding currency swings rose at a slower pace than analysts had projected. Assicurazioni Generali SpA climbed 1.2 percent after Italy’s biggest insurer reported an increase in first-quarter profit.
S&P 500 E-mini futures expiring in June rose, indicating the index will advance for the first time in four days. Kohl’s Corp. and Applied Materials Inc. are among four S&P 500 companies reporting earnings.
Selling Rubles
The ruble slid 1.8 percent, declining for the first time in three days after reaching a five-month high. Russia’s dollar-denominated RTS Index slid 1.6 percent, after the highest close since October.
While the Bank of Russia said foreign-exchange purchases, amounting to $100 million to $200 million daily, were meant to shore up international reserves, Citigroup Inc. said the move signaled that policy makers don’t want the ruble to strengthen past 50 per dollar. It closed below that level for the past two days.
The MSCI Emerging Markets Index retreated 0.2 percent. The Hang Seng China Enterprises gauge dropped for a third day, retreating 0.6 percent to a five-week low. The Shanghai Composite Index was little changed. Taiwan’s Taiex Index retreated 1.2 percent, halting a two-day increase, and India’s S&P BSE Sensex slipped 0.5 percent.
Oil fell for a second day after government data showed U.S. refineries reduced their crude use by the most in four months. Crude stockpiles in the country remain more than 100 million barrels above the five-year average for this time of year and producers are still pumping near a record pace.
Brent for June settlement, which expires today, dropped 0.4 percent to $66.56.
Nickel slid 1 percent, a second day of decline as stockpiles climbed near a record and the economies of China and the U.S., the world’s biggest metals consumers, showed signs of cooling. Inventories of the metal tracked by the London Metal Exchange rose to 441,042 metric tons, close to the record of 444,756 tons reached last month.
