Treasuries rose with U.S. stocks following payrolls data, as investors bet signs of economic improvement won’t accelerate interest-rate increases. Yields on European bonds fell to records after the region’s central bank added stimulus.
The Standard & Poor’s 500 Index added 0.2 percent at 9:31 a.m. in New York. The yield on the 10-year Treasury note fell two basis points to 2.56 percent. The 10-year Italian bond yield slid 19 basis points to 2.75 percent. The Stoxx Europe 600 Index climbed 0.4 percent. Copper slid 1.4 percent.
U.S. employers added 217,000 workers in May, sending payrolls past the pre-recession peak for the first time as the economy gained traction. Yields on Spanish, Belgian and Irish 10-year securities fell to all-time lows a day after the ECB took deposit rates negative, the first major central bank to do so, and offered liquidity to lenders to encourage credit growth.
“The market likes this steady state of economic improvement,” Timothy Ghriskey, chief investment officer at Solaris Asset Management LLC in New York, which helps manage about $1.5 billion in assets, said in a phone interview. “A really weak number would raise economic concerns that the economy is rolling over, and a too-strong number would cause concern about the Fed accelerating its tightening timetable. It’s a sweet spot for the market.”
The S&P 500 has climbed 0.9 percent this week. The 217,000 advance was broad-based and followed a 282,000 gain in April, Labor Department figures showed today. The median forecast in a Bloomberg survey of economists called for a 215,000 increase. Unemployment in May was unchanged at 6.3 percent.
Fed officials are watching the labor market as they move to complete their bond-purchase program late this year and start considering the timing of the first interest-rate increase since 2006. Central-bank stimulus has helped propel the S&P 500 higher by as much as 187 percent from its bear-market low in March 2009.
“The report is right within the expectations and the market will treat it favorably,” Jerry Braakman, chief investment officer of First American Trust in Santa Ana, California, said by phone. His firm oversees $1.1 billion. “It continues the current trend of improving employment. At the same time, it’s not such a wonderful report that you would expect the Fed to change the path.”
Fed Chair Janet Yellen said on May 7 that “a high degree of monetary accommodation remains warranted,” and that there will be “considerable time” before the central bank raises its benchmark rate as slack in the jobs market keeps inflation below its 2 percent target.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major counterparts, dropped 0.1 percent. The euro rose 0.1 to $1.3670, after touching the lowest level since Feb. 6 yesterday. The currency dropped 0.1 percent to 139.74 yen. The yen added 0.2 percent to 102.26 per dollar.
Spain’s 10-year yields fell 17 basis points, or 0.17 percentage point, to 2.66 percent, the least since Bloomberg began compiling the data in 1993.
French five-year yields dropped to a record 0.53 percent, while Irish 10-year rates dropped to as low as 2.46 percent and the yield on similar-maturity Belgian bonds touched 1.80 percent.
“Even the Fed has started to tighten its monetary policy, the rest of world is still easing,” Jerry Braakman, chief investment officer of First American Trust in Santa Ana, California, said by phone. His firm oversees $1.1 billion. “You still have a lot of central bank liquidity being pumped into the system. There is more upside than downside in the market now.”
Three shares advanced for every one that declined on the Stoxx 600, with trading volumes 29 percent higher than the 30-day average, according to data compiled by Bloomberg.
The MSCI Emerging Markets Index added 0.2 percent, extending this week’s gain to 0.9 percent. India’s S&P BSE Sensex climbing 1.5 percent to a record and Turkey’s benchmark gauge headed for its third weekly advance. Malaysia’s ringgit gained 0.5 percent against the dollar and Poland’s zloty advanced 0.4 percent versus the euro.
Hong Kong’s Hang Seng Index slipped 0.2 percent, erasing a weekly gain and the Shanghai Composite Index retreated 0.5 percent. The yuan traded in Hong Kong jumped the most in a week after the central bank raised the currency’s daily fixing by the most in five months.
The International Monetary Fund said yesterday China’s policy makers still have tools to keep economic growth at a medium to high level. Trade data on June 8 may show exports climbed 6.7 percent from a year earlier in May, more than April’s 0.9 percent growth, according to the median estimate in a Bloomberg News survey.
Copper dropped for a fourth day, the longest streak since March 3, to the lowest since May 8. An investigation of metals storage at China’s Qingdao port will make banks cautious about commodity financing, and any lending curbs might weigh on copper, according to Macquarie Group Ltd.