S&P 500 advances while European stocks fall; euro strengthens

‘Key Level’

Five-year notes offer more yield than shorter maturities, while the Fed is considering trimming its purchases of long-term debt as economic growth quickens.

“The five-year is the key level to play that trade with rates staying low for an extended period of time,” said Jason Rogan, managing director of U.S. government trading at Guggenheim Securities LLC, a New York-based brokerage for institutional investors. “The Fed’s making it as painfully obvious as they can that tapering isn’t tightening.”

The Treasury’s 10-year note yield fell three basis points to 2.70%.

The MSCI Emerging Markets Index slipped 0.5%. The Jakarta Composite Index sank 2.3% to an 11-week low and the rupiah slipped 0.4% versus the dollar to the weakest since March 2009. The government raised $190 million yesterday by selling dollar-denominated bonds to local investors, who submitted $294 million of bids, short of the $450 million goal, said Robert Pakpahan, the director general at the debt management office.

Emerging Markets

South Africa’s benchmark gauge slid 1.3% after a report showed the economy grew at the slowest pace in four years. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong decreased 0.8%, led by China Petroleum & Chemical Corp. as the government detained seven people for their role in in a deadly pipeline explosion.

The euro strengthened against 13 of its 16 major counterparts. The European Central Bank doesn’t see deeper disinflation, ECB Executive Board member Benoit Coeure said on CNBC today, after China’s central bank governor said the euro was important to his nation’s reserve management.

“Large central banks around the world are looking to diversify their dollar holdings, in part in favor of the euro,” said Neil Jones, head of European hedge-fund sales at Mizuho Bank Ltd. in London. “When ECB members are doubting disinflation concerns and giving more upbeat growth expectations this also boosts the euro.”

West Texas Intermediate declined for a third day on projections that a report tomorrow will show U.S. crude inventories advanced for a 10th week.

The Energy Information Administration will probably say crude inventories rose 750,000 barrels last week, according to the median of 11 responses in a Bloomberg survey. Stockpiles of distillate fuel fell to a five-year low, the survey showed. Prices slipped yesterday after Iran and world powers reached an interim agreement on Nov. 24 to restrict the country’s nuclear program.


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