Equity Futures, Bond Yields, Oil All Rise Ahead Of Key Jobs Report
Ahead of the jobs report that will help determine the path for interest rates, US futures and European stocks fluctuated. S&P futures are 0.3% higher, reversing earlier losses, with small-caps leading. Nasdaq futures rise 0.4% with AMZN and TSLA notable movers in MegaCap Tech (AMZN +1.4%; TSLA +1.2%). Bond yields are higher, extending Thursday's treasury selloff, 10-yr yields rise 3bps higher. The Bloomberg Dollar Index was slightly lower, but still set for the biggest weekly gain in nearly six months as traders pared back expectations for aggressive US rate cuts. Commodities are mixed with oil higher, base metals lower, and precious metals slightly higher.
In premarket trading, Spirit Airlines sinks 37% as the WSJ reported that the budget carrier is preparing for a bankruptcy filing. Shipping stocks globally fell after US dockworkers agreed to end a three-day strike that had paralyzed trade on the East and Gulf coasts. In US premarket trading, ZIM Integrated Shipping Services Ltd. slumped more than 7%. In Europe, A.P. Moller-Maersk A/S dropped 6.6% and Hapag-Lloyd AG fell 12%. The stocks had rallied on expectations the strike would lead to increased container rates.
While investors keep a watchful eye over geopolitical events, they are also assessing the latest signals on the health of the US economy. Friday’s jobs report is expected to show an increase in payrolls for September, while the unemployment rate is forecast to hold steady at 4.2%.
According to BofA strategist Michael Hartnett, as well as Goldman Sachs , risk assets are likely to rally if the report is within the range of market expectations. The addition of between 125,000 to 175,000 jobs last month would support a soft economic landing and keep bond yields in a range, sparking a risk-on trade, Hartnett wrote in a report. A “blowout” report showing greater than 225,000 payrolls and an unemployment rate of less than 4.1% would drive the 30-year Treasury yield above 4.5%, the strategist said. Meanwhile, jobs below 75,000 alongside an unemployment rate of above 4.3% would be “recessionary.”
Traders are also bracing for extra volatility following the payrolls report. The options market is betting the S&P 500 Index will move roughly 1.15% in either direction after the data, according to Goldman Sachs. If it happens, that would be roughly in line with the past two jobs prints, and the biggest move in two weeks.
European stocks tick higher on Friday, reversing some of the week’s losses ahead of US jobs data which could give investors better clarity about the Federal Reserve’s next move. The energy and real estate sectors lead gains while media equities are among the biggest laggers. Stoxx 600 rises 0.2% to 517.17 with 399 members up, 191 down and 10 unchanged.
Earlier in the session, Asian stocks advanced as the rally in Hong Kong shares resumed, while traders assessed the impact of escalating tensions in the Middle East. The MSCI Asia Pacific Index rose as much as 0.6%, with Tencent and Alibaba among the biggest boosts. Chinese shares in Hong Kong advanced after retreating in the previous session, as investors pinned hopes on Golden Week holiday spending data that may give the market another leg up. The mainland Chinese market is shut through Monday. Shares in Japan gained after the yen weakened further. South Korean stocks also advanced, while Taiwan edged lower after the market reopened following a two-day closure due to a typhoon.
In FX, the yen is the best performer among the G-10 FX, rising 0.3% to around 146.47 against the greenback. The Bloomberg Dollar Spot Index is flat ahead of the US jobs report. The pound rises 0.2%, boosted by BOE Chief Economist Pill who warned against cutting interest rates “too far or too fast.” A decent beat for UK construction PMI also helped. Both have weighed on gilts which underperform their German counterparts, with UK 10-year yields rising 5 bps to 4.07%. Treasuries are little changed across the curve.
In commodities, crude oil rises for a fourth straight day and adding to the biggest one-day jump in almost a year as fears that Israel may decide to strike Iranian crude facilities keep the market on edge. WTI is up 1% at ~$74.45 a barrel, briefly exceeding $75 for the first time since Aug. 30. Spot gold is steady at $2,657/oz.
Looking at today's calendar, the economic data calendar includes only September jobs report; median estimates in Bloomberg survey are for a 150k increase in nonfarm payrolls and a 4.2% unemployment rate, unchanged from August; crowdsourced whisper number for nonfarm payrolls change is 152k. Fed speakers scheduled include New York’s Williams (9am), and Chicago’s Goolsbee (10am, 10:30am and 4pm).
Bottom Line
The market is eagerly anticipating the US jobs report for September as it will play a significant role in determining the path for interest rates. The report is expected to show an increase in payrolls for September, while the unemployment rate is forecast to hold steady at 4.2%. In addition to the jobs report, traders are also keeping a close eye on geopolitical events, particularly the escalating tensions in the Middle East.
What are your thoughts on the current market conditions? Do you think the jobs report will meet expectations? Share this article with your friends and let us know your thoughts. Don't forget to sign up for the Daily Briefing which is everyday at 6pm.
Equity Futures, Bond Yields, Oil All Rise Ahead Of Key Jobs Report
Ahead of the jobs report that will help determine the path for interest rates, US futures and European stocks fluctuated. S&P futures are 0.3% higher, reversing earlier losses, with small-caps leading. Nasdaq futures rise 0.4% with AMZN and TSLA notable movers in MegaCap Tech (AMZN +1.4%; TSLA +1.2%). Bond yields are higher, extending Thursday's treasury selloff, 10-yr yields rise 3bps higher. The Bloomberg Dollar Index was slightly lower, but still set for the biggest weekly gain in nearly six months as traders pared back expectations for aggressive US rate cuts. Commodities are mixed with oil higher, base metals lower, and precious metals slightly higher.
In premarket trading, Spirit Airlines sinks 37% as the WSJ reported that the budget carrier is preparing for a bankruptcy filing. Shipping stocks globally fell after US dockworkers agreed to end a three-day strike that had paralyzed trade on the East and Gulf coasts. In US premarket trading, ZIM Integrated Shipping Services Ltd. slumped more than 7%. In Europe, A.P. Moller-Maersk A/S dropped 6.6% and Hapag-Lloyd AG fell 12%. The stocks had rallied on expectations the strike would lead to increased container rates.
While investors keep a watchful eye over geopolitical events, they are also assessing the latest signals on the health of the US economy. Friday’s jobs report is expected to show an increase in payrolls for September, while the unemployment rate is forecast to hold steady at 4.2%.
According to BofA strategist Michael Hartnett, as well as Goldman Sachs , risk assets are likely to rally if the report is within the range of market expectations. The addition of between 125,000 to 175,000 jobs last month would support a soft economic landing and keep bond yields in a range, sparking a risk-on trade, Hartnett wrote in a report. A “blowout” report showing greater than 225,000 payrolls and an unemployment rate of less than 4.1% would drive the 30-year Treasury yield above 4.5%, the strategist said. Meanwhile, jobs below 75,000 alongside an unemployment rate of above 4.3% would be “recessionary.”
Traders are also bracing for extra volatility following the payrolls report. The options market is betting the S&P 500 Index will move roughly 1.15% in either direction after the data, according to Goldman Sachs. If it happens, that would be roughly in line with the past two jobs prints, and the biggest move in two weeks.
European stocks tick higher on Friday, reversing some of the week’s losses ahead of US jobs data which could give investors better clarity about the Federal Reserve’s next move. The energy and real estate sectors lead gains while media equities are among the biggest laggers. Stoxx 600 rises 0.2% to 517.17 with 399 members up, 191 down and 10 unchanged.
Earlier in the session, Asian stocks advanced as the rally in Hong Kong shares resumed, while traders assessed the impact of escalating tensions in the Middle East. The MSCI Asia Pacific Index rose as much as 0.6%, with Tencent and Alibaba among the biggest boosts. Chinese shares in Hong Kong advanced after retreating in the previous session, as investors pinned hopes on Golden Week holiday spending data that may give the market another leg up. The mainland Chinese market is shut through Monday. Shares in Japan gained after the yen weakened further. South Korean stocks also advanced, while Taiwan edged lower after the market reopened following a two-day closure due to a typhoon.
In FX, the yen is the best performer among the G-10 FX, rising 0.3% to around 146.47 against the greenback. The Bloomberg Dollar Spot Index is flat ahead of the US jobs report. The pound rises 0.2%, boosted by BOE Chief Economist Pill who warned against cutting interest rates “too far or too fast.” A decent beat for UK construction PMI also helped. Both have weighed on gilts which underperform their German counterparts, with UK 10-year yields rising 5 bps to 4.07%. Treasuries are little changed across the curve.
In commodities, crude oil rises for a fourth straight day and adding to the biggest one-day jump in almost a year as fears that Israel may decide to strike Iranian crude facilities keep the market on edge. WTI is up 1% at ~$74.45 a barrel, briefly exceeding $75 for the first time since Aug. 30. Spot gold is steady at $2,657/oz.
Looking at today's calendar, the economic data calendar includes only September jobs report; median estimates in Bloomberg survey are for a 150k increase in nonfarm payrolls and a 4.2% unemployment rate, unchanged from August; crowdsourced whisper number for nonfarm payrolls change is 152k. Fed speakers scheduled include New York’s Williams (9am), and Chicago’s Goolsbee (10am, 10:30am and 4pm).
Bottom Line
The market is eagerly anticipating the US jobs report for September as it will play a significant role in determining the path for interest rates. The report is expected to show an increase in payrolls for September, while the unemployment rate is forecast to hold steady at 4.2%. In addition to the jobs report, traders are also keeping a close eye on geopolitical events, particularly the escalating tensions in the Middle East.
What are your thoughts on the current market conditions? Do you think the jobs report will meet expectations? Share this article with your friends and let us know your thoughts. Don't forget to sign up for the Daily Briefing which is everyday at 6pm.
