Bonds Jump With Gold as Dollar Sinks on U.S. Retail Sales, PPI

Bonds jumped, gold rallied and the dollar weakened after reports showed sales at U.S. retailers were little changed in July and wholesale prices unexpectedly fell by the most in almost a year.

Treasury 10-year note yields dropped below 1.5 percent after the data, gold climbed the most in two weeks and the dollar dropped versus most of its major counterparts. The MSCI All Country World Index of stocks rose to a one-year high, boosted by increases in oil prices. Norway’s krone led the currencies of crude-exporting nations higher.

Equities and bonds are both higher on the week, buoyed by optimism central banks will retain or enhance supportive policies as the economy expands, but at a subdued pace. Data out of Europe Friday showed a 0.3 percent increase in euro-area gross domestic product, with growth in Italy grinding to a halt. Monetary authorities in Australia, New Zealand and the U.K. cut benchmark interest rates to records this month, while the Bank of Japan and European Central Bank are using unprecedented stimulus to spur expansion. In oil, speculation that informal OPEC talks next month will stabilize the market buoyed prices.

Bonds

Treasury 10-year note yields sank seven basis points to 1.49 percent as of 8:42 a.m. New York time as bonds surged around the world.

U.K. gilts extended a fourth weekly gain, as the Bank of England’s first week of its expanded bond buying plan drew to a close. The central bank has left its quantitative-easing shopping list broadly unchanged for next week, even after it failed to attract enough sellers of gilts due in more than 15 years to hit its purchase target at an operation on Tuesday. The yield on 10-year gilts touched a record-low 0.508 percent.

Spanish and Italian government bonds also headed for their fourth weekly advance. The yield on Spain’s 10-year security was at 0.93 percent, after touching a record-low 0.913 percent on Thursday.

China’s 10-year bonds yielded 2.66 percent, the least in data going back to 2006.

Germany’s economy expanded 0.4 percent in the second quarter, slowing from a 0.7 percent expansion in the previous three months, data showed Friday. In Italy, preliminary figures showed gross domestic product unchanged, disappointing forecasts for growth of 0.2 percent.