Bonds Drop With Gold on Manufacturing as U.S. Stocks Fluctuate
London (Dec 2) Government bonds fell around the world after manufacturing expanded more than expected in the euro area, the U.K. and China before U.S. data is released later today. Gold slid while U.S. stocks fluctuated and the New Zealand and Australian dollars rallied.
German 10-year bund yields climbed 2.5 basis points to 1.71 percent at 9:33 a.m. in New York. Treasury 10-year note yields gained three basis points and the rate on similar-maturity gilts jumped six basis points. Gold dropped 1.4 percent. The pound touched its strongest level versus the dollar since August 2011, while New Zealand’s kiwi jumped 0.8 percent and the Australian dollar added 0.1 percent. The Stoxx Europe 600 Index fell 0.2 percent while the Standard & Poor’s 500 Index was little changed.
Manufacturing in the euro-area expanded, with Markit Economics’s factory index rising to 51.6 in November. The gauge in Spain fell to 48.6, the lowest since May, and topped a forecast 51.1. Manufacturing indexes in China beat estimates for November as gauges in South Korea, India and Taiwan climbed. The U.S. Institute for Supply Management’s index was 55.1 in November, falling from the highest level since April 2011, according to the median economist forecast in a Bloomberg survey.
“The European PMIs were stronger than expected, apart from Spain, and this is weighing on bunds,” said Mathias Van Der Jeugt, a fixed-income strategist at KBC Bank NV in Brussels. “In the short term, the data limits the chance that the ECB will ease further. We believe U.S. manufacturing ISM can also beat consensus today and add downward pressure onto bunds.”
Treasuries, Gilts
Treasury 10-year note yields rose three basis points to 2.78 percent and the rate on similar-maturity gilts climbed five basis points to 2.82 percent. America’s banks have never been so wary of risking their cash deposits on U.S. government debt. Their $1.8 trillion of the bonds now equal less than 70 percent of their cash, the least since the Federal Reserve began compiling the data in 1973.
New Zealand’s dollar strengthened against all of its 16 major counterparts. Australia’s dollar rose 0.3 percent to 91.31 U.S. cents. The yen lost 0.4 percent to 102.86 per U.S. dollar, the euro slipped 0.4 percent to $1.3540 and the Canadian currency lost as much as 0.4 percent to C$1.0654 per U.S. dollar, its weakest since October 2011.
Global stocks beat all assets for a third month in November, the longest winning streak since 2009. The MSCI All- Country World Index of equities rose 1.5 percent including dividends as China pledged to expand economic freedoms, the European Central Bank cut interest rates and speculation increased the Federal Reserve will put off a paring of stimulus.
