Euro Tops $1.35 First Time Since 2011 as Metals Advance

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The euro strengthened above $1.35 for the first time since 2011, metals gained and Treasuries fell as the Federal Reserve meets and European economic confidence rose more than estimated this month. European stocks declined from a 23-month high.The euro appreciated 0.5 percent to $1.3553 at 6:20 a.m. in New York, while the yen declined against all but one of its 16 major peers. Nickel advanced 1.6 percent and zinc climbed 1.7 percent, leading commodities to a three-month high. The Treasury 10-year yield climbed two basis points to 2.02 percent. The Stoxx Europe 600 Index slipped 0.4 percent, while Standard & Poor’s 500 Index futures swung between gains and losses. Amazon.com Inc. (AMZN) jumped 9.3 percent after reporting gains in sales and North American operating margins.Enlarge imageSouth Korea won notes are arranged for a photograph in Seoul, South Korea. Photographer: SeongJoon Cho/Bloomberg6:45Jan. 30 (Bloomberg) -- Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd., discusses the euro, yen and potential impact of tighter Federal Reserve monetary policy on currency markets. He talks with Mark Barton and Caroline Hyde on Bloomberg Television's "On the Move." (Source: Bloomberg)5:22Jan. 30 (Bloomberg) -- Nick Nelson, a strategist at UBS AG, discusses his stock recommendations and the outlook for U.S. and European banks. He speaks with Francine Lacqua on Bloomberg Television's "On the Move." (Source: Bloomberg)Enlarge imageEuro banknotes of various denominations are arranged for a photograph in Soka City, Saitama Prefecture, Japan. Photographer: Kiyoshi Ota/BloombergThe Fed’s latest round of bond buying will reach $1.14 trillion before it ends the program in the first quarter of 2014, economists forecast in a Bloomberg survey. The U.S. will report fourth-quarter economic growth today before monthly payroll data on Feb. 1. An index of executive and consumer sentiment rose to 89.2, surpassing the 88.2 reading forecast in a Bloomberg survey, the European Commission said today.“The world is shifting from fear to hunt for opportunity,” said Neil Jones, head of European head of hedge- fund sales at Mizuho Corporate Bank Ltd. in London. “Slowly but surely, economic data in the euro zone is going in the right direction and the numbers today were encouraging. The euro is leading the way today.”

Euro Gains

The euro advanced for a second day against the dollar, reaching $1.3563, the highest level since November 2011. It appreciated to 85.99 British pence, the strongest since Dec. 7, 2011. Against the yen, Europe’s shared currency rose 1.1 percent.The yen weakened 0.7 percent to 91.33 per dollar, taking its January loss to 5 percent. That would be a fourth monthly decline, the longest losing streak since 2008. It reached 91.41 yen per dollar today, the weakest level since June 2010.South Korea’s won retreated 0.3 percent against the dollar after Deputy Finance Minister Choi Jong Ku said taxes on currency trading and bonds should be considered to help limit “speculative” inflows. The Israeli shekel slipped less than 0.1 percent after Stanley Fischer said yesterday he will step down as central bank chief in June.U.S. Treasuries dropped for a fifth day, the longest run of declines since August. Singapore bonds also fell, pushing 10- year yields nine basis points higher to 1.48 percent.The yield on Italy’s 10-year note rose five basis points to 4.22 percent as government sold 3 billion euros ($4.1 billion) of 2017 notes and 3.5 billion euros of bonds due in 2022.

Metals Climb

The S&P GSCI gauge of 24 commodities climbed 0.3 percent to the highest since Oct. 11. Zinc, nickel, aluminum and copper rose at least 1.4 percent. Oil gained 0.3 percent to $97.84 a barrel. Palladium rose to a 16-month high. U.S. natural gas increased 0.9 percent, the first advance for the most-active contract in seven sessions.The Stoxx 600 retreated as oil-services companies tumbled after Italy’s Saipem SpA (SPM) cut its profit forecast. Saipem lost 35 percent. Petrofac Ltd. sank 5.6 percent in London trading, Technip SA retreated 6.4 percent in Paris and Subsea 7 SA declined 5.7 percent in Oslo.Imperial Tobacco Group Plc sank 4.8 percent as Europe’s second-biggest tobacco company said earnings will drop because of worsening conditions in Europe. Swedbank AB jumped 7.9 percent after raising its dividend payout ratio to 75 percent of profit as fourth-quarter net income more than quadrupled.

Best Start

The S&P 500 extended its best start to a year since 1989 as profit beat the average analyst estimate at 76 percent of the 180 companies in the index that posted results so far this reporting season. The gauge, which has rallied 5.7 percent in 2013, is less than 4 percent below its record of 1,565.15 set in October 2007, while the Dow Jones Industrial Average is less than 2 percent from its all-time high.Amazon gained as the world’s largest Internet retailer said fourth-quarter sales climbed 22 percent to $21.3 billion. Operating margin in North America widened to 5 percent from 2.9 percent a year earlier.Data today is forecast to show U.S. economic growth slowed to 1.1 percent on an annualized basis in the fourth quarter, according to the median estimate in a Bloomberg survey. Expansion was 3.1 percent in the three months ended Sept. 30.Employers added 161,000 workers to payrolls in January after a 155,000 December increase, according to the median estimate of economists in a Bloomberg survey before the Feb. 1 Labor Department report.http://www.bloomberg.com/news/2013-01-30/asian-stocks-rise-for-second-day-as-won-strengthens-oil-falls.html

Economy Probably Slowed as U.S. Spending Gain Drained Stockpiles

The U.S. economy probably grew in the fourth quarter at the weakest pace in almost two years as a pickup in spending drained inventories and exports slumped, economists said before a report today.Gross domestic product rose at a 1.1 percent annual rate, down from a 3.1 percent gain in the prior three months and the least since the first quarter of 2011, according to the median forecast of 83 economists surveyed by Bloomberg. Consumer purchases, the biggest part of the economy, probably accelerated.Enlarge imageRecord-low mortgage rates are aiding a rebound in residential real estate. Combined sales of new and previously owned properties last year rose 9.9 percent, the biggest annual gain since 1998. Photographer: Sam Hodgson/Bloomberg5:36Jan. 29 (Bloomberg) -- Jan Hatzius, chief economist at Goldman Sachs Group Inc., talks about the drop in U.S. consumer confidence in January, the outlook for Federal Reserve monetary policy and the global economy. He speaks with Erik Schatzker and Stephanie Ruhle on Bloomberg Television's "Market Makers." (Source: Bloomberg)Bolstered by a drop in fuel prices and rising incomes, households overcame superstorm Sandy, a bitter presidential contest and Washington budget battles. The gain in spending may be difficult to sustain this quarter as a tax increase takes a bigger chunk from paychecks, one reason why Federal Reserve policy makers, meeting today, are projected to press on with plans to pump money into the world’s largest economy.“It’s the story of a moderately growing economy,” said Michael Gapen, a New York-based senior economist at Barclays Plc and former Fed economist. “The modest-growth environment will keep the Fed on its current plan.”The Commerce Department’s report is due at 8:30 a.m. in Washington. Economists’ estimates for GDP, the volume of all goods and services produced in the U.S., ranged from 0.3 percent to 2.1 percent.At 8:15 a.m., figures from the Roseland, New Jersey-based ADP Research Institute may show companies added 165,000 workers to payrolls in January following a 215,000 gain the prior month, according to the Bloomberg survey median.

Fed Meeting

Later in the day, a statement from Fed policy makers at the end of their two-day meeting may say the central bank will continue its unprecedented balance-sheet expansion. The Federal Open Market Committee will renew its commitment after determining the benefits from the program exceed any risk of inflation or financial instability, according to economists surveyed by Bloomberg Jan. 24-25.The GDP data may show consumer spending grew at a 2.1 percent annual rate last quarter after advancing 1.6 percent from July through September, economists predicted.Retail sales rose more than forecast in the final month of the quarter, helped by job gains, rising house values and cheaper gasoline prices in addition to discounting by chains such as Macy’s Inc.Automobile purchases also are spurring demand. Cars and light trucks sold at a 15.3 million annual rate in December after 15.5 million the prior month, the best back-to-back showing since early 2008, according to Ward’s Automotive Group.

Spending Outlook

Recent reports signal consumer confidence and spending may cool this quarter, in part due to changes in fiscal policy. Congress on Jan. 1 let the payroll tax revert to 6.2 percent from 4.2 percent while avoiding broad-based income-tax increases. Lawmakers are now wrangling over spending reductions scheduled for March 1 that threaten to further slow the economy.At the same time, sustained gains in housing, a rebound in business investment and stabilization in global growth that is benefiting companies such General Electric Co. (GE) will probably help underpin GDP.General Electric’s fourth-quarter profit topped analysts’ estimates as demand in emerging markets fueled the aviation and health-care divisions, which helped build a record $210 billion order backlog for the Fairfield, Connecticut-based company.“We saw real strength in the emerging markets and the developed regions stabilized,” Chief Executive Officer Jeffrey Immelt said on a Jan. 18 conference call. GE “entered 2013 with substantial momentum” following “solid order growth in five of the six businesses,” he said.

Housing Market

Record-low mortgage rates are aiding a rebound in residential real estate. Combined sales of new and previously owned properties last year rose 9.9 percent, the biggest annual gain since 1998. A report yesterday showed an index of property values in 20 cities jumped in the 12 months to November by the most in more than six years.Investors are being encouraged by signs the U.S. expansion is holding up. The Standard & Poor’s 500 Index climbed 0.5 percent yesterday to close at a five-year high.Capital spending, which fell in the July-September quarter for the first time in more than three years, also stabilized toward the end of 2012, the GDP report may show. Orders for non- defense capital goods excluding aircraft, a proxy for future corporate spending on items like computers, engines and communications gear, climbed in December to cap the biggest three-month advance since mid-2011, according to data this week.

Caterpillar Optimistic

Caterpillar Inc. (CAT), the world’s largest maker of construction and mining equipment, is among manufacturers expecting an improving outlook.http://www.bloomberg.com/news/2013-01-30/economy-probably-slowed-as-u-s-spending-gain-drained-stockpiles.html