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Treasuries, Gold Fall as Dollar Gains While S&P 500 Rebounds

November 8, 2013

Nov. 8 (Bloomberg) -- Treasuries sank the most since July and gold slid as a bigger-than-forecast increase in American payrolls fueled speculation the Federal Reserve may trim stimulus earlier than expected. The dollar strengthened against all 16 major peers while U.S. stocks advanced.

The yield on 10-year Treasuries jumped 14 basis points to 2.74 percent at 11:32 a.m. in New York and climbed as much as 16 basis points. Gold futures dropped 1.8 percent to $1,285.00 an ounce. The Standard & Poor’s 500 Index rebounded 0.7 percent after tumbling 1.3 percent yesterday. French bonds fell after S&P downgraded the country’s debt. The dollar climbed 0.5 percent against the euro. AT&T Inc. and BNP Paribas SA led 21 billion euros ($28 billion) of bond sales in Europe this week, the busiest in two months.

Employers in the U.S. added 204,000 workers last month, the Labor Department said, following a revised 163,000 gain in September that was larger than initially estimated. The median forecast of 91 economists surveyed by Bloomberg called for a 120,000 increased. Data yesterday showed faster-than-estimated economic growth. France’s rating was lowered to AA from AA+ at S&P.

"For markets it shows that the labor market continues to tighten and should bring forward people’s estimates of when the Federal Reserve will have to reduce bond purchases," said David Kelly, the chief global strategist at JPMorgan Funds in New York, which oversees about $400 billion in long-term assets. "Ultimately this is good news for the economy. I think in the long run it’s good news for the stock market."

 

Treasury Yields

 

Thirty-year U.S. bond rates jumped 12 basis points to 3.83 percent and two-year note yields increased three basis points to 0.31 percent.

Yields have risen since the Federal Open Market Committee said Oct. 30 that the economy showed signs of "underlying strength" even as policy makers agreed to continue the $85 billion of monthly bond purchases, known as quantitative easing. They next meeting is Dec. 17-18.

The Bloomberg U.S. Dollar Index, a gauge of the currency against 10 major peers, climbed 0.6 percent to reach an almost two-month high of 1,022.7. The currencies of Norway, Brazil and Sweden led losses against the dollar, weakening at least 0.9 percent.

The S&P 500 dropped 1.3 percent yesterday, its worst loss since August, and is down 0.1 percent this week. The gauge is up about 23 percent for the year, rivaling 2009 for its biggest gain in a decade, and is trading near its most-expensive price- to-earnings valuation in more than three years.

 

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