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Treasuries fell, sending 10-year yields to an almost three-month high, on speculation the Federal Reserve will put off more stimulus measures. U.S. and European stocks fluctuated along with commodities.
The 10-year yield rose as much as five basis points to 1.79 percent and was two basis points higher at 9:45 a.m. in New York. The Standard & Poor’s 500 Index was little changed near 1,404, while the Stoxx Europe 600 Index erased an earlier decline of as much as 0.6 percent. Standard Chartered Plc rallied after settling a money-laundering probe. The euro weakened against all but one of its major peers. Natural gas dropped 2 percent while gasoline and soybeans rallied.
The Fed will hold off from a third round of bond buying, known as quantitative easing, in September amid better economic figures, Goldman Sachs Group Inc. said in a report. U.S. industrial production increased in July, Federal Reserve data showed today, while a government report yesterday showed retail sales grew more than forecast. Other data today showed the cost of living in the U.S. was little changed in July while manufacturing in the New York area unexpectedly contracted.
“Yields are rising as expectations for more stimulus are being pushed back,” said Marc Ostwald, a fixed-income strategist at Monument Securities Ltd. in London. “U.S. data aren’t suggesting growth at breakneck speed but neither is it pointing to a downturn.”
The Citigroup Economic Surprise Index for the U.S., which measures how much data is beating or trailing the median forecasts in Bloomberg surveys, has climbed to an almost four- month high of minus 12.1 after sliding to this year’s low of minus 65.3 on July 19.
Yields on 30-year bonds increased three basis points to 2.87 percent, the highest level since May.
International demand for U.S. financial assets fell in June from the previous month’s inflows, as investors saw Europe’s leaders moving toward a resolution of their financial crisis.
Net buying of long-term equities, notes and bonds totaled $9.3 billion during the month, a drop from net purchases of $55.9 billion in May, the Treasury Department said today. Economists surveyed by Bloomberg News projected net buying of $40 billion of long-term assets, according to the median estimate.
German bunds and U.K. gilts declined. Germany’s 10-year yield climbed five basis points to 1.52 percent, surpassing 1.5 percent for the first time since July 4. The rate of similar- maturity British notes jumped to 1.65 percent, the highest since July 6.
The cost of insuring European corporate debt rose from a five-month low, with the Markit iTraxx Crossover Index of credit-default swaps on 50 mostly junk-rated companies increasing seven basis points to 581.
The euro dropped 0.4 percent to $1.2276 and lost a similar amount versus the yen.
The S&P 500 slipped for a third day. Deere & Co. retreated after trading after the largest maker of farm equipment cut its full-year earnings forecast after fiscal third-quarter profit that trailed behind estimates.
The S&P 500 had fluctuated around 1,400 for the previous six trading sessions, closing yesterday at 1,403.93. The index has rebounded almost 10 percent from a five-month low on June 1.
U.S. equity volume this week reached the lowest level since at least 2008 excluding holidays and volatility slid to a five- year low as vacationing traders awaited policy clues from the Fed’s summit at the end of the month.
About 4.5 billion shares changed hands on all venues on Aug. 13, the lowest level in data compiled by Bloomberg going back four years that excludes the days surrounding New Year’s, Christmas, Thanksgiving and Independence Day. Volume was about 5.2 billion shares yesterday, still about 22 percent below the average level of the year.
The Chicago Board Options Exchange Volatility Index, known as the VIX, lost 7.1 percent to 13.70 on Aug. 13, the lowest level since June 2007. The VIX rebounded 8.4 percent to 14.85 yesterday.
The Stoxx 600 (SXXP) fluctuated near its highest level since March 19. Mining companies led losses after a director at Vale SA, the world’s biggest iron-ore producer, said that China’s “golden years” are behind it. Eurasian Natural Resources Corp. slid 7.1 percent as the Kazakh metal producer posted a 60 percent slump in first-half profit. Stock markets in Italy, Greece, Austria and Luxembourg were closed for public holidays today.
Standard Chartered gained 5 percent after it agreed to pay $340 million to settle a probe by New York regulators into allegations it helped funnel Iranian money into the U.S. The regulator had threatened to strip the lender of its license to operate in the state.
The MSCI Emerging Markets Index (MXEF) fell 0.4 percent. The Shanghai Composite Index slid 1.1 percent and Russia’s Micex Index lost 1.7 percent. Markets in India, South Korea and Poland were closed for holidays.
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