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The Bloomberg Dollar Spot Index rose 0.1 percent at 6:50 a.m. in New York. The Bloomberg Commodity Index (BCOM) fell 0.2 percent as oil declined 0.8 percent and copper slipped 0.5 percent. Emerging market stocks dropped for an eighth day, the ruble weakened for a third day and U.K. natural gas advanced the most in two weeks. Standard & Poor’s 500 Index futures lost 0.2 percent and the Stoxx Europe 600 Index declined 0.1 percent.
Royal Bank of Scotland Group Plc cut its 2014 estimate for Chinese economic expansion to 7.2 percent from 7.6 percent after August industrial output growth was the weakest since the global financial crisis. Factory data is due in the U.S., where the fastest rise in
retail sales in four months bolstered speculation the Federal Reserve will signal moves toward interest-rate increases and reduce its quantative easing program of bond purchases at a meeting this week. U.S. Secretary of State John Kerry is scheduled to meet Russian Foreign Minister Sergei Lavrov today.
“The strength of the dollar is something we’ve been anticipating, knowing that we have QE finally ending,” Dan Morris, a global investment strategist at TIAA-CREF Asset Management, said in an interview on Bloomberg Television’s “On The Move” with Jonathan Ferro in London. “You do see a negative reaction on the part of emerging markets when those currencies do start to weaken against the dollar, with cash flowing back to the U.S.”
U.S. Treasuries
Speculation that a strengthening U.S. economy will prompt the Fed to bring forward its timeline for raising borrowing costs is pushing down Treasuries and boosting the allure of the dollar. The U.S. 10-year note yield was at 2.60 percent after touching 2.62 percent today, the highest since July 7, and the Bloomberg Dollar Spot Index advanced to its strongest level since July 2013.Spain’s bonds rose, pushing 10-year yields three basis points lower to 2.32 percent.
Australia’s dollar fell below 90 cents for the first time since March and South Africa’s rand slid for a sixth straight day today. Malaysia’s ringgit led losses in Asia as it fell by the most since March and a gauge of emerging-market currencies slid to the lowest since 2009.
The krona was little changed at 9.2267 against the euro today. The three-party Social Democratic opposition bloc won 43.6 percent of the vote in an election, versus 39.5 percent for the government’s coalition, with 97 percent of ballots counted. The Social Democrats must now garner support from other parties to form a majority.
Unprecedented Stimulus
Unprecedented stimulus by central banks helped swell investments in emerging markets to $1.4 trillion as of May, raising the risk that those markets may destabilize when interest rates rise or their exchange rates fall, the Bank for International Settlements said in a report yesterday. The Fed has created a committee led by Vice Chairman Stanley Fischer to monitor financial stability, reinforcing its efforts to avoid the emergence of asset-price bubbles.The Bloomberg Commodity Index declined as much as 0.4 percent to the lowest since July 29, 2009. West Texas Intermediate oil dropped to $91.43 a barrel and Brent crude fell to $96.78 a barrel. Copper retreated to $6,800.50 a metric ton. China is the biggest buyer of energy and industrial metals. U.K. natural gas for October gained as much as 4.6 percent on concern an escalation of fighting in Ukraine may disrupt flows from Russia to Europe.
The MSCI Emerging Markets Index slid 0.7 percent, extending its longest run of losses since a 10-day rout ended Nov. 13.
The ruble weakened as much as 0.9 percent to 38.1013 per dollar. Ukraine’s July 2017 Eurobond fell for a second day, sending the yield 27 basis points higher to 13.09 percent.
Paris Meeting
Kerry will meet with Lavrov at a conference on Iraq that will take place in Paris. Russia still has more than 3,000 soldiers inside Ukraine and about 25,000 troops along the border, according to the nation’s government. The U.S. and other NATO countries are commencing military exercises in the country today.The U.S. on Sept. 12 expanded sanctions against Russia to include OAO Sberbank, the country’s largest bank, because of the fighting in eastern Ukraine. The EU added 15 companies, including Gazprom Neft, OAO Rosneft and OAO Transneft, and 24 people to its own list of those affected by its restrictions.
The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong slid 1.6 percent to a five-week low. The Shanghai Composite Index added 0.3 percent.
Industrial Output
Industrial output rose 6.9 percent from a year earlier in August, the statistics bureau said on Sept. 13, down from 9 percent in July and the slowest pace outside the Lunar New Year holiday period of January and February since December 2008, based on previously reported figures compiled by Bloomberg. Retail sales gained 11.9 percent and fixed-asset investment in the January-August period climbed 16.5 percent, both missing analyst estimates.In the U.S., a report will probably show that industrial production advanced 0.3 percent in August after gaining 0.4 percent the previous month, according to the median estimate of economists surveyed by Bloomberg News.
The MSCI All-Country World Index fell after sliding 1.4 percent last week, its first drop since the period ended Aug. 8.
The Stoxx 600 decline was led by oil and gas companies, following a 1 percent decline last week. The U.K.’s FTSE 100 Index lost 0.2 percent today before this week’s Scottish referendum. Lloyds Banking Group Plc dropped 1.6 percent.
Air France
TDC A/S (TDC) lost 7.7 percent after Denmark’s largest telephone company agreed to buy cable-TV provider Get AS and said it will cut its dividend. Nobel Biocare Holding AG dropped 5.5 percent after Danaher Corp. agreed to acquire it, paying less than its share price at the last close.Air France-KLM Group slid 3.5 percent after saying it expects its most disruptive strike since 1998.
SABMiller Plc and Heineken NV both advanced more than 1.4 percent after the U.K. brewer was rebuffed in an attempt to buy the Dutch company. Micro Focus International Plc jumped 13 percent after agreeing to buy business-software provider The Attachmate Group Inc.
Hennes & Mauritz AB (HMB) climbed 2.4 percent after Europe’s second-biggest clothing retailer reported a 16 percent gain in third-quarter sales.
Futures (SPX) on the S&P 500 expiring in December fell 0.2 percent today after the index posted its first weekly decline since the period ended Aug. 1.
Alibaba IPO
Yahoo! Inc. rose 2.4 percent in early New York trading after people with knowledge of the matter said Alibaba Group Holding Ltd. will increase the size of its initial public offering amid strong investor demand.The MSCI AC Asia Pacific Index (MXAP) fell 0.6 percent today for an eighth consecutive day of declines, the longest streak since January 2010.
Phones 4u Ltd. filed for administration and will close its mobile-phone stores across the U.K. after failing to secure contract renewals with mobile carriers EE Ltd. and Vodafone Group Plc.
Its 430 million pounds of bonds maturing April 2018 plunged 26 pence on the pound to a low of 10.4 pence, according to data compiled by Bloomberg. The 9.5 percent bonds were quoted at 102 pence on Aug. 29.
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