US Treasuries extended losses as investors booked profits
from a recent rally that pushed yields on two-year notes to record lows on
Tuesday.
Investors took heart after data showed US private employers
added 42,000 jobs in July, compared with a revised gain of 19,000 in June,
according to payrolls processor ADP Employer Services.
The vast service sectors in the United States and euro zone
both grew last month, reports showed, easing some worries about a severe
slowdown in the global economic recovery.
MSCI’s all-country world index pared losses to trade near
break-even.
“The data was better than expected, and the market likes that,
but ‘blah’ is the best way still to define this recovery,” said Peter Boockvar,
equity strategist at Miller Tabak & Co in New York.
The European data held a mixed message, however. Fears of a
double dip recession were allayed after the euro zone’s dominant service sector
picked up speed in July, but strong growth in Germany and France masked
weakness in southern Europe.
European equities ended slightly higher on news of the US
economic data but German Bunds were up on the day, supported by broader worries
about a faltering global economic recovery.
“Markets are struggling to understand what’s happening and
whether to put emphasis on the good part of the news or on the bad part, and
this explains the nervousness,” said Philippe Gijsels, head of research at BNP
Paribas Fortis Global Markets in Brussels.
The FTSEurofirst 300 index of top European shares closed 0.2
percent higher at 1,071.02 points.
On Wall Street, the Dow Jones industrial average was up
54.04 points, or 0.51 percent, at 10,690.42. The Standard & Poor’s 500
Index was up 6.04 points, or 0.54 percent, at 1,126.50. The Nasdaq Composite
Index was up 17.71 points, or 0.78 percent, at 2,301.23.
The dollar rebounded from an eight-month low against the yen
and rose against the euro as the US data prompted traders to unwind bets
against the US currency.
“It’s obvious the pace of US growth is slowing and people
are waiting to sell the dollar at better levels,” said Hidetoshi Yanagihara,
senior currency trader at Mizuho Corporate Bank in New York.
The dollar was up against a basket of major currencies, with
the US Dollar Index up 0.47 percent at 80.972.
The euro was down 0.50 percent at $1.316 and against the
Japanese yen, the dollar was up 0.64 percent at 86.33.
US Treasury debt prices fell. The benchmark 10-year US
Treasury note was down 10/32 in price to yield 2.9426 percent. The 2-year US
Treasury note was down 2/32 in price to yield 0.57 percent.
Benchmark US crude oil prices rose a touch after earlier
declines, responding to official figures showing a higher than expected fall in
crude stocks.
The optimism was, however, tempered by a rise in gasoline
and distillate inventories.
US light sweet crude oil rose 21 cents to $82.76 a barrel.
Spot gold prices rose $14.45 to $1,199.10 an ounce.
Earlier in Asia, Tokyo stocks fell 2.1 percent, while the
MSCI Asia-Pacific index that excludes Japan was down 0.1 percent.
Fears that a strong yen would erode exporters’ profits and
sap economic growth boosted Japanese government bonds, pushing the 10-year
yield below 1 percent for the first time in seven years.
