Stocks gained and Treasuries fluctuated before US employment data that will be scrutinized for clues on the path for Federal Reserve interest rates.
(Bloomberg) — Stocks gained and Treasuries fluctuated before US employment data that will be scrutinized for clues on the path for Federal Reserve interest rates.
Contracts for the S&P 500 and Nasdaq 100 indexes both rose, setting US stocks on course to trim their biggest weekly decline since March. Europe’s Stoxx 600 index posted a modest advance as travel and leisure shares outperformed.
Amazon.com Inc. jumped 9% in US premarket trading following robust results. Apple Inc.’s market value was set to dip below the historic $3 trillion level after the iPhone maker posted a third straight quarter of declining sales.
Friday’s non-farm payrolls figures are forecast to show the US added 200,000 jobs in July. While that would be the weakest print since the end of 2020, it’s still strong historically and a number exceeding that may fuel bets on more Fed hikes. A report Thursday underscored resilient US demand for workers and the mood in markets remains cautious.
“With NFP still to come, I shouldn’t think investors are too willing to jump in with both feet just yet,” said James Athey, investment director at Abrdn.
Longer-dated Treasury yields were steady, still on pace for their worst week of the year, with the benchmark 10-year note little changed at around 4.18%.
Investors are taking stock at the end of a torrid week in the bond market. The jolt from Fitch Ratings stripping the US of its triple-A credit ranking was compounded by news Wednesday that the government will boost quarterly debt sales to $103 billion, more than expected. Yields soared to the highest since November as traders fretted over the increased supply, wiping out the Treasury market’s gains for 2023.
Read more: Bond Market on the Ropes Confronts Risk of Pivotal Jobs Report
Meantime, rate options traders are paying up for protection against further increases in long-maturity Treasury yields. A metric that compares demand for bearish put options to demand for bullish call options shows the widest divergence since September for options on CME Group Inc.’s US Treasury Bond Futures contract, which currently tracks a bond that matures in 2039. The gaps are less extreme for options on shorter-maturity Treasury futures.
The recent tumult in markets is making investors wary. Bank of America Corp.’s clients are moving out of equities as the risk of an economic contraction remains high, strategist Michael Hartnett said. “Private clients are shifting back to ‘risk-off’ mode,” he wrote in a note, adding that a hard landing was still a risk for the second half amid higher bond yields and tighter financial conditions.
In the latest batch of European earnings, WPP Plc dropped after the advertising group cut its revenue guidance. Credit Agricole SA rallied as the French lender reported a surge in profit.
Some of the main moves in markets:
- The Stoxx Europe 600 rose 0.2% as of 10:09 a.m. London time
- S&P 500 futures rose 0.4%
- Nasdaq 100 futures rose 0.6%
- Futures on the Dow Jones Industrial Average rose 0.2%
- The MSCI Asia Pacific Index was little changed
- The MSCI Emerging Markets Index rose 0.1%
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0939
- The Japanese yen was little changed at 142.63 per dollar
- The offshore yuan was little changed at 7.1887 per dollar
- The British pound was little changed at $1.2697
- Bitcoin fell 0.4% to $29,156.23
- Ether fell 0.5% to $1,832.85
- The yield on 10-year Treasuries was little changed at 4.18%
- Germany’s 10-year yield advanced one basis point to 2.62%
- Britain’s 10-year yield was little changed at 4.48%
- Brent crude rose 0.4% to $85.50 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Farah Elbahrawy and Richard Henderson.
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