US dollar strengthens as treasuries erase gain on Yellen comments
Hong Kong (July 15) The dollar strengthened and Treasuries erased gains after Federal Reserve Chair Janet Yellen said the economy is poised for further improvement that will enable the central bank to raise interest rates in 2015. The dollar climbed 0.3 per cent to ¥123.80 (RM3.80) at 8.51am in New York, and the yield on Treasury 10-year notes rose three basis point to 2.43 per cent. Spanish and Italian bonds gained as traders looked past Greece’s financial turmoil, while mining stocks led European shares higher as copper gained after signs of stabilisation in China’s economy. Yellen said Fed officials expect growth “to strengthen over the remainder of this year and the unemployment rate to decline gradually.” Data today showed the Empire State factory index increased more than forecast in July. The dollar gained 0.3 per cent to US$1.0974 (RM4.17) per euro.
Standard & Poor’s 500 Index futures rose less than 0.1 per cent. Bonds climb Bank of America Corp rose 3.2 per cent after the second— biggest US lender by assets said profit more than doubled as expenses fell to the lowest since 2008. Spain’s 10-year bond yield fell seven basis points to 2.02 per cent and Portugal’s rate dropped four basis points to 2.70 per cent. Greece’s main opposition parties are set to support bailout terms, giving Prime Minister Alexis Tsipras enough backing to push them through parliament.
The Stoxx Europe 600 Index rose 0.3 per cent as a gauge of basic-resource companies jumped 1.9 per cent. Syngenta AG advanced 3.1 per cent as people familiar with the matter said hedge-fund Paulson & Co had taken a stake in the Swiss company, a sign the firm backs a takeover attempt by Monsanto Co Receptos Inc. climbed 9.9 per cent in German trading after Celgene Corp agreed to buy the drugmaker.
Copper climbed 1.1 per cent, nickel gained 1.4 per cent and zinc jumped 2.5 per cent. China’s gross domestic product expanded 7 per cent in the second quarter, with industrial production and retail sales topping projections, reports showed today. Analysts had forecast GDP in China, the world’s biggest consumer of industrial metals, would increase 6.8 per cent, according to a Bloomberg survey. China rout The Shanghai Composite Index fell 3 per cent, extending declines from a June 12 peak to 26 per cent. A gauge of mainland companies in Hong Kong retreated 1.3 per cent. Policy makers have introduced measures to stem a rout that erased almost US$4 trillion from the value of the nation’s equities in less than a month. Canada’s loonie was 0.2 per cent weaker against the US dollar.
The Bank of Canada will probably cut its key rate 25 basis points to 0.5 per cent, a Bloomberg survey showed. The currency gets its nickname from the image of the aquatic bird on the CUS$1 coin. New issuance of euro-denomiated bonds is resuming after a drought during the Greek financial crisis. Lloyds Banking Group Plc sold notes in the currency while Westpac Banking Corp and Aeroports de Paris are offering debt, according to people familiar with the sales. German debt collector GFKL Financial Services is also marketing high-yield bonds to help fund its buyout by private— equity firm Permira Advisers, a person familiar said. There hasn’t been a junk-bond sale by a European company since June 26.
Source: Bloomberg
