US Treasuries Recover As Stocks Fall On Disappointing Jobs Report And Sovereign Debt Default Concerns

I … Today was an epic day in financial market history, as stocks gaped open lower and fell all day on news that the U.S. added Census Jobs in May, but private hiring disappointed the market, and on news that Hungary said it’s in a very grave situation because a previous administration “manipulated” economic figures. US Treasuries recovered from losses as investors perceived them, being a dollar based investment, to be a safe haven. Gold rose on sovereign debt default concerns. Gold stocks fell lower with stocks and silver fell lower with the commodities.

II … Stocks dropped like a rock on opening on the Christine Hauser report that The U.S. Adds Census Jobs In May, But Private Hiring Disappoints 

III … Viktor Glugovsky reports “Death Since March 2010 As Credit Default Swaps Have Been Rising Since March “  Sovereign credit-defaults swaps surged on sovereign bonds surged on speculation Europe’s debt crisis is worsening after Hungary said it’s in a “very grave situation” because a previous government lied about the state of the economy. The cost of insuring against losses on Hungarian sovereign debt jumped 83.5 basis points to 391.5, according to CMA DataVision prices. Swaps on France, Austria, Belgium and Germany also rose, sending the Markit iTraxx SovX Western Europe Index of contracts on 15 governments 10 basis points higher to 163, and close to the all-time high of 167 on May 6. Hungary’s bonds fell after a spokesman for Prime Minister Viktor Orban said talk of a default is “not an exaggeration” because a previous administration “manipulated” figures. The country was bailed out with a 20 billion-euro ($24 billion) aid package from the European Union and International Monetary Fund in 2008. “The comments out of Hungary have really spooked the market,” said Rajeev Shah, a credit strategist at BNP Paribas SA in London. “Investors are interpreting it as bad sign for trying to tackle Europe’s debt crisis.” The euro dropped below $1.21 for the first time since April 2006, stocks tumbled and the cost of insuring against corporate default rose on speculation Hungary will weaken the EU’s willingness to rescue the region’s indebted nations. Swaps on Spanish government debt jumped 39.5 basis points to a record 295.5, according to CMA. Contracts on Portugal rose 37 to 376, Ireland was up 38 basis points at 298, and Italian swaps climbed 30 basis points to an all-time high of 264. Contracts on Greece rose 61 basis points at 787. ‘Something Serious’ The Markit iTraxx Crossover Index of swaps linked to 50 companies with mostly high-yield credit ratings jumped 21 basis point to 557, according to Markit Group Ltd. “Are we on the brink of something more serious?” Deutsche Bank AG strategist Jim Reid wrote in a note to clients today. “We’ve little doubt that the authorities have no appetite for imminent peripheral defaults but we do see the situation getting worse before it gets better. This leaves markets vulnerable until there is more certainty surrounding the structure of the peripheral funding bail-out.”

And he adds that South Korea is hosting a Group of 20 meeting of the world’s top wealthy and emerging economies on Friday and Saturday. U.S. Treasury Secretary Timothy Geithner and European Central Bank President Jean-Claude Trichet are among the dozens of top officials meeting in the southern port city of Busan to find ways to lift the bruised global economy.

IV.  The Yen, FXY, rose, and the Euro, FXE, plummeted, sending European, FEZ, 6%, and Asian, DNH, 4.5% shares lower. 

Carry trade investors pressured European Financials, EUFN,  6.5%, Spain, EWP, 7%,  Austria, EWO, 7%, Developing Europe, GUR, 5%, and Poland, PLND 8.2%.  Tyler Durden reports Spanish Bund spreads have surged to all time highs just south of 200 bps; click on the chart of the Euro Carry Trade to enlarge. 

It’s like Harry relates Bell Rings For Carry Trade Unwinding where he shows the chart of the Euro; it really took a tumble as news of Hungary’s misery hit the market: it closed under $1.20

Treasury shares, IEF, TLT, and ZROZ rose; click on chart to enlarge.

Chart of Ten Year US Treasury Notes Weekly; click on to enlarge.

The 3x Treasury Bear, TMV, fell; but not to a bottom, indicating that overall US Treasuries have turned lower; click on chart to enlarge. 

The US Dollar 2x ETF, UUP, blasted higher; click on chart to enlarge. The US Dollar, $USD, roared to a four year high against the Euro: $1.20 and the futures price of the dollar closed at 88.29.

Gold, GLD, rose 1%; while the HUI Precious Metal Mining Stocks, GDX, fell 2%, continuing a trend of disconnecting from gold.

Housing, XHB, -5.0%

Small Cap Value, RZV, -5%

Russell 2000, IWM, -5%

Real Estate, IYR -5.4%

Mortgage Finance, KME -4.9% 

Industrials, XLI, -4.6%

Steel, SLX, and metal manufacturing, XME, led the basic material stocks, IYM, 4.5% lower.

Semiconductors, SMH,  -4%

Resource intensive Brazil, EWZ, -3.5% and Australia, -5.0% on yen carry disinvestment and risk aversion to petroleum and mining  development.

Emerging Markets, EEM, -3.5% 

Silver, SLV, fell lower with the commodities, that is base metals, DBB; and in doing so proved itself to be an industrial metal and not an investment metal; yen carry trades washed out of timber, CUT and oil, USO, which fell 4.6%.

The gold ETF, GLD, closed at 119; wealth is best preserved and maintained by investing in gold; I personally recommend gold coins