GLD, TLT Rise As SPY Tanks On Jobs Data

April 05, 2013

A weak jobs report serves up faint, but still unsettling, echoes of the past few years.


The SPDR Gold Trust (NYSEArca: GLD) was rallying early Friday, as gold prices jumped higher on the heels of a U.S. jobs report that failed to meet market expectations, and instead showed that the jobs market faltered in March.

Many had been looking for the Bureau of Labor Statistics to show Friday that March job growth reached about 200,000 nonfarm payrolls, but the number came in at 88,000—only about a third of February’s total.

The number, while accompanied by a downwardly revised unemployment rate now pegged at 7.6 percent, was enough to boost gold prices at a time when the precious metal has struggled to catch a break in the face of a rallying stock market and signs of a generally improving economy.

Comex gold futures jumped more than $12 right off the bat, and climbed to a high of $1,580 before retrenching a bit. The move, nearing a 1.6 percent gain on the day, helped propel GLD—the second-largest ETF in the world and the single largest bullion-based strategy—which was gaining 1.6 percent after gapping higher in daily charts.

On the flip side, the S&P 500 was on track to see its worst weekly performance of the year, sliding another 0.9 percent early Friday amid concerns that the enthusiasm over U.S. economic growth of late might have been a bit overdone. In the past five days, the broad benchmark has slipped roughly 1.5 percent, though year-to-date, it remains ahead by 6.6 percent.

The SPDR S&P 500 ETF (NYSEArca: SPY), the largest ETF in the world with $126 billion in assets, gapped lower at the opening, giving back 0.9 percent in early trade just to retrace its steps enough for losses of some 0.3 percent Friday.

From an asset flows perspective, investors appear to be confident in U.S. equities these days, having poured a net of $1.985 billion into the fund in the past week alone. Year-to-date, that number isn’t as reassuring, as outflows from SPY now amount to $3.28 billion.

At roughly $151.5 a share, GLD remains 5.7 percent off year-to-date and 3.5 percent on the year, and the decline has come hand in hand with asset outflows. Investors have taken some $767.1 million out of the fund in the past five days, according to data compiled by IndexUniverse, putting total year-to-date net outflows at $7.39 billion.

Treasurys: Yes Or No?

The surprising jobs report also impacted the value of U.S. debt. Yields on 10-year Treasury bonds dropped 3.8 percent early Friday, and stood at roughly 1.69 percent. They are now almost 10 percent lower on the week.

Yields move inversely to bond prices, meaning U.S. Treasury bond ETFs were seeing a boost from the latest data tidbit courtesy of the U.S. Labor Department.

The iShares Barclays 20+ Year Treasury Bond Fund (NYSEArca: TLT)—a $3.5 billion ETF that’s largely seen as a bellwether for Treasury ETFs—was gaining 2 percent Friday, having now gained some 4.3 percent in the past five days alone.

Interestingly, the upward move has come despite net outflows of $214 million from the fund in the past week.

Year-to-date, however, the fund remains in the black when it comes to asset growth, as investors have so far poured a net of $311 million into TLT since January 1. TLT has seen gains of 0.7 percent so far this year.



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