Capital Gold Group Report: Germany Prohibits Naked Short-selling of Euro

May 19 (Bloomberg) -- Stocks and commodities slid and Treasury 10-year note yields neared the lowest level of the year after Germany banned some bearish bets against government bonds and banks. The euro rose from a four-year low on speculation European leaders will take steps to support the currency.

The MSCI World Index slumped 1.5 percent at 1:05 p.m. in New York for a fifth-straight drop, the longest streak since January. The Standard & Poor’s 500 Index fell 0.6 percent and the S&P GSCI Index of 24 commodities tumbled 1.4 percent, with both near their lowest levels since February. The euro rallied 1.1 percent to $1.2339, helping to send gold down 2.8 percent. The 10-year Treasury yield lost one basis point to 3.33 percent.

Germany’s ban of naked short-sales spurred concern investors will lose options for hedging against losses on risky assets. U.S. equities also tumbled after the Mortgage Bankers Association said a record share of U.S. mortgages were in foreclosure and the Senate moved closer to voting on a bill to strengthen regulation of Wall Street.

“It’s like seeing a movie you’ve seen before and which doesn’t end that well,” said E. William Stone, who oversees $104 billion as chief investment strategist at PNC Wealth Management in Philadelphia. “There’s concern that the European situation may spread and we can see a repeat of the financial crisis of 2008. The German ban is the same kind of game plan and it didn’t necessarily work at that point either.”

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