Equity exchange traded funds (ETFs) jumped out of the gate on Friday after a surprisingly strong jobs report soothed investor fears about the strength of the economic recovery.
- Treasury prices fell on Friday, pushing yields up from near the lowest levels of the year, after data showed the U.S. economy added 244,000 jobs in April, more than economists had expected. Yields on 10-year notes, which move inversely to prices, rose 8 basis points to 3.23%, and from 3.16% before the data. A basis point is 1/100th of a percent. On Thursday, the benchmark’s yield touched 3.15%, the lowest since mid-March and within a basis point of the lowest level since early December. Yields on 2-year notes increased 4 basis points to 0.62%, coming off the lowest levels in seven weeks. Thirty-year bond yields jumped 9 basis points to 4.35%. They touched the lowest since December on Thursday, as a big drop in commodity prices eased worries that rising energy costs would fuel inflation, which erodes the value of fixed-income payments. The ProShares UltraShort 20+ Year Treasury ETF (NYSEArca: TBT) is up almost 2% early Friday.
- Commodities fell for a fifth day, extending the biggest rout since December 2008, as investors cut their holdings in oil, silver and industrial metals amid concern that economic growth will slow. “It’s panic,” said Michael Shaoul, chairman of Marketfield Asset Management, which oversees $1 billion in New York. “It’s not a global financial crisis. It’s a classic liquidation move in a crowded trade.” Investors held a record $412 billion of raw-material assets by the end of March, almost 50 percent more than a year earlier, according to Barclays Capital. Investment linked to commodity indices reached a record-high $352 billion last month, Bank of America Merrill Lynch said today. Funds held a net 1.49 million futures and options in 18 commodities by April 26, 57 percent more than a year earlier, within 4.8 percent of a record, according to U.S. Commodity Futures Trading Commission data compiled by Bloomberg. The PowerShares DB Precious Metals ETF (NYSEArca: DBP) gained almost 1% so far today.
- Asian stocks traded mostly lower on Friday as commodity-related shares were battered by falling crude-oil and metals prices in jittery markets ahead of U.S. nonfarm payrolls data for April. Hong Kong’s Hang Seng Index fell 0.4% to 23,159.14 for an eighth successive session, China’s Shanghai Composite dropped 0.3% to 2,863.89, Australia’s S&P/ASX 200 gave up 0.2% to 4,743.0 and Taiwan’s Taiex shed 0.5% to 8,977.23. Big losses were suffered by Japanese and South Korean stocks as those markets reopened after holidays, with the Nikkei Stock Average falling 1.5% to 9,859.20 in Tokyo and the Kospi losing 1.5% to 2,147.45 in Seoul. The market was also disappointed to find out over the three-day holiday that car production in the key North American market will remain limited through the summer due to parts shortages from Japan, said Yoshihiro Okumura, general manager of research at Chibagin Asset Management. The Vanguard MSCI Pacific ETF (NYSEArca: VPL) surged almost 2% early Friday.
Gregory A. Clay contributed to this article.
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