Treasury Rates Climb as U.S. Stocks Fall From Record, Gold Drops
New York (Dec 19) Treasury 10-year yields climbed to a three-month high and U.S. stocks fell, pulling benchmark indexes down from records, while gold sank following the Federal Reserve’s decision to reduce bond purchases. European stocks rose, catching up with yesterday’s U.S. rally.
Ten-year Treasury yields jumped 3.6 basis points to 2.93 percent and the Standard & Poor’s 500 Index (SPX) lost 0.3 percent as of 10:29 a.m. in New York. The Stoxx Europe 600 Index rose as much as 1.7 percent for its biggest gain in two months. Gold slid below $1,200 an ounce for the first time since June, reaching the lowest prices in euros and pounds since 2010. The U.S. dollar rose versus 14 of 16 major peers as the Bloomberg-JPMorgan Asia Dollar Index (ADXY) reached the lowest since September.
The Fed said it will lower its monthly asset purchases to $75 billion from $85 billion, citing an improved outlook for the U.S. employment market. Applications for U.S. unemployment benefits unexpectedly rose last week to an almost nine-month high, showing fluctuation in the filings that typically occurs around the year-end holidays. The Bank of Japan began a two-day policy meeting.
“You’ve got standard post-FOMC volatility,” said Jim Vogel, head of agency-debt research at FTN Financial in Memphis, Tennessee. “There were only so many trades you could do yesterday afternoon, so you were fighting with what other people were doing for their positions.”
U.S. Debt
U.S. government securities due in 10 years or more yielded 1.18 percentage points more than non-U.S. sovereign debt, the most since June 2007, Bank of America Merrill Lynch data show. The rate on 10-year German bunds climbed three basis points to 1.88 percent.
Three rounds of monetary stimulus have helped send the S&P 500 up as much as 168 percent from a 12-year low in 2009. The equities benchmark has surged 26 percent this year, challenging 2003 for the biggest annual gain since 1997.
Gold futures traded in New York dropped as much as 3.5 percent to $1,192 an ounce, their lowest price since June 28. Gold for immediate delivery fell 3.2 percent.
