Treasuries, Dollar Advance as Silver Climbs to 30-Year High
Dec. 6 (Bloomberg) -- Treasuries snapped a three-day loss, the dollar gained and silver jumped to a 30-year high after Federal Reserve Chairman Ben S. Bernanke said the central bank may boost purchases of U.S. securities. Most Asian stocks rose.
Ten-year Treasury yields fell four basis points to 2.97 percent as of 2:18 p.m. in Tokyo, while the U.S. currency strengthened against 13 of its most active peers. South Korea's won rose to a two-week high. Silver climbed to $29.80 an ounce and copper rallied for a fifth day. The MSCI Asia Pacific Index added 0.2 percent to 133.64, extending a three-day gain, while futures on the Standard & Poor's 500 Index lost 0.1 percent.
Fed purchases of Treasuries beyond the $600 billion announced are "possible" given that U.S. unemployment may take five years to fall to a normal level, Bernanke said, helping to overcome investor concern over an unexpected gain in the jobless rate last month. Europe's finance ministers are meeting today in Brussels after Belgian Finance Minister Didier Reynders said on Dec. 4 the region's bailout fund could be increased to stem contagion from the sovereign crisis.
"It seems that some of the negative macro factors in the month of November have eased at the moment," said Khiem Do, the Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management (Asia) Ltd., which oversees about $12 billion. The possibility of further easing by the Fed "suggests liquidity will remain abundant and that's a positive contributor," he said.
The S&P 500 rose 0.3 percent on Dec. 3 amid a rally in commodity stocks. The gauge fell as much as 0.4 percent after the Labor Department said U.S. payrolls increased by 39,000 last month, trailing the median economist projection in a Bloomberg News survey for an increase of 150,000 jobs. The jobless rate rose to 9.8 percent from 9.6 percent.
Bernanke Interview
While a long period of high unemployment could damage confidence, a return to a recession "doesn't seem likely," Bernanke said in an interview on CBS Corp.'s "60 Minutes" program. Any increase of the planned purchase of bonds will depend on "the efficacy of the program" and the outlook for inflation and the economy, the Fed Chairman said. The yield on the benchmark 10-year Treasury note climbed to as high as 3.04 percent on Dec. 3, the highest level since July 28.
Gains today helped the dollar rebound from a three-week low against the yen. The greenback rose to 82.98 yen from 82.53 yen in New York, the lowest since Nov. 15. It appreciated to $1.3351 per euro from $1.3414.
"We see the overall U.S. economy is improving and hear that Bernanke may expand the bond purchase program," said Koji Fukaya, chief currency strategist in Tokyo at Credit Suisse Group AG. "Those factors should support the dollar."
Bailout Fund
Belgium's Reynders, whose country holds the rotating EU presidency until the end of this year, told reporters on Dec. 4 that a 750 billion-euro ($1 trillion) bailout fund could be increased. He said European finance ministers meeting in Brussels today will discuss the outlook for Portugal, which is struggling to quash speculation it will need a bailout.
South Korea's won climbed 0.5 percent to 1,132.40 per dollar as speculation of additional bond purchases by the Fed spurred demand for higher-yielding assets. Malaysia's ringgit appreciated 0.2 percent to 3.1365 per dollar, a one-week high, after the government rolled back subsidies for the second time in six months, boosting efforts to lower the country's budget deficit.
Silver for immediate delivery gained as much as 1.5 percent to the highest level since 1980. Copper futures in London rose as much as 0.6 percent to $8,780 a metric ton and was set for its longest rally since July amid a labor dispute at Anglo American Plc and Xstrata Plc's Collahuasi venture in Chile, the world's third-biggest copper mine.
Wheat's Rally
Wheat in Chicago rallied as much as 2.4 percent to $7.98 a bushel, the highest price in four months, on concern that unusually heavy rain in Australia will delay the harvest and reduce grain quality. Crude oil added 0.2 percent to $89.38 a barrel, the highest in 26 months. Commodities had their biggest weekly gain last week since October 2009 as global shortfalls of cotton and wheat drove agriculture prices higher. The Thomson Reuters/Jefferies CRB Index of 19 raw materials jumped 5 percent.
The cost of protecting Asian bonds from non-payment decreased, according to credit-default swap traders. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan dropped 2 basis points to 106.5 basis points, Royal Bank of Scotland Group Plc prices show. That will be its lowest close since Nov. 22, according to CMA in New York.
Taiwan, Japan
About three stocks gained for every two that declined on MSCI's Asian index. Taiwan's Taiex index climbed 1 percent after Nomura Holdings Inc. raised its rating on the island's equities to "bullish" from "bearish" amid optimism for improved economic relations with China.
Japan's Nikkei 225 Stock Average lost 0.2 percent, retreating from the highest since June, after a slump in the dollar on Dec. 3 weighed on Canon Inc. and the country's exporters.
Hyundai Motor Co. fell 1.1 percent after South Korea and the U.S. revised a stalled free-trade accord, allowing the U.S. to end a 2.5 percent tariff on automobiles in five years, instead of immediately or after three years, as was previously agreed.
To contact the reporters on this story: Shiyin Chen in Singapore at schen37@bloomberg.net Kana Nishizawa in Tokyo at knishizawa5@bloomberg.net
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net .
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