Dow tumbles most in year, Treasuries rally on budget showdown

Bond Returns

U.S. bonds have returned 1.8 percent this year, including reinvested interest, and about 15 percent since Obama took office, according to Bank of America Merrill Lynch indexes.

Ever since Lyndon B. Johnson defeated Barry Goldwater for the presidency in 1964, yields on 10-year Treasuries have dropped about 40 basis points in the first month when a Democrat wins, and risen 19 after a Republican victory, according to data compiled by Bloomberg.

Oil sank 4.8 percent to $84.44 a barrel to lead losses in 16 of 24 commodities tracked by the S&P GSCI Index, which tumbled 2.4 percent for its biggest drop since July.

The Stoxx Europe 600 Index slid 1.4 percent, erasing earlier gains after European Central Bank President Mario Draghi said the German economy is beginning to be hurt by the euro-area debt crisis and the European Commission said the region will virtually grind to a halt next year. German industrial production fell for a second month in September, the Economy Ministry in Berlin said today.

European Markets

About seven shares fell for each that advanced in the Stoxx 600, with commodity producers and banks leading declines among the gauge’s 19 industry groups. Randgold Resources Ltd. sank 6.4 percent after the producer of gold in West Africa said full-year output will be at the bottom of its target.

BNP Paribas SA rallied 1.1 percent as France’s largest bank said third-quarter profit more than doubled after it posted higher revenue at the investment-banking unit.

Greek 10-year bonds erased earlier gains, pushing the yield up 13 basis points to 17.35 percent. Prime Minister Antonis Samaras faces a test of his coalition government as he seeks parliamentary approval of austerity measures to unlock bailout funds amid the third general strike in six weeks. Approval of the legislation is the first of the parliamentary votes required by Nov. 12 to receive a 31 billion-euro ($40 billion) portion of international aid. A roll-call vote is expected after 8 p.m. Athens time.

Yields on German 10-year debt declined six basis points to 1.38 percent, the lowest in two months. Rates on Spanish and Italian debt of similar maturity increased three basis points and one basis point respectively.

The exchange-traded fund tracking developing-nation shares sank the most in two weeks as equity indexes from Hungary to Brazil fell along with U.S. stocks and oil. BYD Co., the Chinese carmaker partly owned by Warren Buffett’s Berkshire Hathaway Inc., surged 11 percent.

The iShares MSCI Emerging Markets Index ETF tumbled 1.5 percent. BYD led gains in industrial and technology companies in the MSCI Emerging Markets Index, which was little changed.

Bloomberg News

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