U.S. stocks, Treasuries rise on Fed; euro gains on German data

German Confidence

The 17-nation euro rose against 11 of its 16 major counterparts and added 0.7% to 137.25 yen, reaching its strongest level against the Japanese currency since October 2009. The yen fell 0.2% against the dollar to 101.31.

German business confidence rose in November. The Ifo institute’s business climate index, based on a survey of 7,000 executives, increased to 109.3 from 107.4 in October. Economists forecast a gain to 107.7, according to the median of 43 estimates in a Bloomberg News survey.

Data released today confirmed a preliminary estimate that showed German economic growth slowed to 0.3% in the third quarter from 0.7% in the previous three months. The expansion was driven by domestic demand that offset weaker exports, the report showed.

Treasuries rose as 10-year note yields at the highest level in two months yesterday attracted buyers. Fed policy makers discussed creating a program to buy short-term Treasury securities to keep yields in line with their policy intentions, according to minutes of their October meeting.

Such a tool could help reinforce the Fed’s commitment to keep the benchmark overnight lending rate near zero even after it starts to reduce its $85 billion in monthly bond purchases.

The yield on benchmark 10-year German government bonds climbed 1 basis point to 1.75%, after rising to 1.78% yesterday, the highest since Nov. 13.

Australian Dollar

The Australian dollar slipped 0.8% to 91.65 U.S. cents, poised for a 2.2% loss since Nov. 15, the biggest drop among 16 major currencies tracked by Bloomberg.

Reserve Bank of Australia Governor Glenn Stevens said yesterday he’s open-minded about intervention to weaken its currency.

“Every indication is for low interest rates in the developed world for a very long time,” said Daniel Weston, a portfolio manager at Aimed Capital GmbH in Munich. “Investors believe equities are the place to be.”

Crude oil fell 0.6% to $94.86 a barrel in New York after jumping 1.7% yesterday.

Brent crude’s premium over West Texas Intermediate reached reached an eight-month high as rising U.S. inventories weighed on prices and nuclear negotiators with Iran made little progress.

WTI declined as rising domestic production added to crude inventories at record highs for this time of year. Brent touched a five-month high as envoys stumbled in their efforts to ease the standoff over the atomic ambitions of Iran.

“It’s hard to ignore all the tailwinds to this market,” Chris Bouffard, chief investment officer of the Mutual Fund Store in Overland Park, Kansas, which oversees $8.5 billion, said in a phone interview. “We’ve got low oil, that’s definitely helping consumers, especially going into the key holiday spending period. Buybacks and dividends are doing very well. Housing continues to do pretty well and there’s basically no inflation to speak of.”


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