Treasuries rally amid mixed data, stocks advance

Treasuries rallied as traders assessed mixed data from the world’s largest economy. Stocks rose on bets Mexican tariffs will be avoided.

The 10-year bond yield fell back below 2.1% as weak private jobs data outweighed a report showing service industries beat estimates. The Dow Jones Industrial Average outperformed major gauges as Boeing surged after Bloomberg News reported the company has been negotiating one of the largest orders ever of wide-body jetliners with Chinese airlines. The Mexican peso rose after White House trade adviser Peter Navarro told CNN the Trump administration’s plan to impose tariffs may not have to go into effect.

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Investors have aggressively increased bets the Fed will ease after a string of weak reports on retail sales, factory orders and home purchases indicated growth is slowing as the trade war weighs on businesses. While the service industries expansion report was robust, the ADP data suggest payroll gains in Friday’s jobs report in the Labour Department could be lower than expected.

"The weaker ADP report that just came out aligns with the drop in business sentiment we have been monitoring," said Matt Miskin, a market strategist at John Hancock. "Investors will be watching the NFP report on Friday with anticipation to see if the jobs market is indeed starting to cool down."

Here are some notable events coming up:

China President Xi Jinping begins a two-day visit to Russia on Wednesday. Theresa May steps down on Friday as leader of the Conservative Party. Friday’s US jobs report is projected to show payrolls rose by 180 000 in May, unemployment held at 3.6%, a 49-year low, and average hourly earnings growth sustained a 3.2% pace.

These are some of the main moves in markets:  

Stocks

The S&P 500 climbed 0.4% to 2,813.30 as of 10:25 a.m. New York time. The Stoxx Europe 600 Index rose 0.3%. The MSCI Asia Pacific Index increased 1.1%.

Currencies

The Bloomberg Dollar Spot Index rose less than 0.05%. The euro increased 0.2% to $1.1274. The Japanese yen climbed less than 0.05% to 108.12 per dollar.

Bonds

The yield on 10-year Treasuries dipped three basis points to 2.10%. Germany’s 10-year yield fell one basis point to -0.22%. Britain’s 10-year yield fell four basis points to 0.859%.

Commodities

The Bloomberg Commodity Index fell 0.4%. West Texas Intermediate crude dipped 1.1% to $52.90 a barrel. Gold climbed 1% to $1 342.40 an ounce.