Oil dips below $50; Euro gains, bonds slump on ECB

Bloomberg

European Central Bank optimism on global growth bolstered the euro and sent bonds lower as the prospects for more stimulus dimmed. US stocks rose even as oil slid below $50 a barrel for the first time this year, exacerbating a slump in commodities.
Lenders led the S&P 500 Index to its first gain in four days, as the yield on 10-year Treasury notes topped 2.58 percent, a level last seen in December. The euro strengthened after ECB president Mario Draghi said risks to growth are more balanced. Oil slumped with base metals as speculation mounted that there is too much supply. The crude selloff rippled through the junk-debt market with a gauge for the high-risk securities poised for the worst week since November. Draghi’s observation that the balance of risks to growth had improved while the ECB raised its inflation expectations for this year sparked speculation the central bank’s next meeting will be less accommodative. The falling commodity prices underscore the ECB’s reluctance to withdraw support even after inflation reached its target in February for the first time since January 2013.
“Until wages and service prices pick up the ECB will remain cautious,” said Semin Soher, senior portfolio manager at Pioneer Investments in Dublin. “They’re likely to look through February inflation as fleeting rather than durable” because of transitory energy prices, she said.

What’s ahead for the markets:
Official US jobs data for February are due Friday. Employers probably added around 200,000 workers to payrolls, in line with the average over the past six months and a sign of steady job growth, economists forecast.

Stocks
The S&P 500 rose 0.1 percent to 2,364.65 at 10:50 a.m in New York. The measure is down about 1.4 percent since reaching a record March 1. Financial shares led gains as the yield on 10-year Treasuries topped 2.58 percent. The Euro Stoxx 600 Index slipped 0.1 percent, headed for its fifth drop in six days. Miners and energy producers led losses. Emerging-market equities sank 1.3 percent, the most since December.

Commodities
WTI crude traded 2 percent lower at $49.29 per barrel. Concerns mounted that OPEC’s output cuts are failing to restrain record U.S. stockpiles. Gold slid toward $1,200 an ounce in its longest losing run since October as positive US economic figures reinforce expectations that yields on other investments will rise this year. Futures fell 0.4 percent to $1,204.40 an ounce, declining for a fourth day.

Currencies
The euro rose 0.4 percent to $1.0579, paring a gain that took it above $1.06. The Bloomberg Dollar Spot Index rose 0.1 percent. The yen slipped to 114.837 per dollar. South Korea’s won paced losses in emerging-market currencies.

Bonds
U.S. benchmark bonds followed European peers lower. The yield on the U.S. Treasury note due in a decade rose two basis points to 2.578 percent while that on the bund jumped five basis points to 0.42 percent.