(Bloomberg) — Stock futures fell and bond yields climbed after data showing a still solid US labor market threw cold water on expectations the Federal Reserve would soon moderate its pace of rate hikes to prevent a more significant economic slowdown.
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S&P 500 contracts pushed lower, signaling the benchmark gauge will drop for a third consecutive session. Treasury 10-year yields climbed, pushing toward a 10th straight week of increases — the longest winning run since 1984. The dollar rose.
Nonfarm payrolls increased 263,000 in September — the smallest monthly advance since April 2021 — after a 315,000 gain in August, a Labor Department report showed Friday. The unemployment rate unexpectedly dropped to 3.5%, matching a five-decade low. Average hourly earnings rose firmly.
“Bottom line: 75 bp in November is a done deal, and I think 75 bp in December is becoming a real possibility,” says Win Thin, head of currency strategy at BBH.
The September jobs numbers will be followed by the minutes of the Fed’s latest meeting and inflation figures next week. Five Fed officials, in separate remarks during the course of Thursday, delivered a resolutely hawkish message that inflation remains too high and they won’t be deterred from raising interest rates by volatility in financial markets.
Investors poured the most money into cash since April 2020 on fears of a looming recession, but stocks could see further declines as they don’t fully reflect that risk, say Bank of America Corp. strategists.
Even as major benchmarks bounced off last month’s lows, the bank’s report citing EPFR Global data showed cash funds received nearly $89 billion in the week through Oct. 5, while investors withdrew $3.3 billion from global stock funds.
Some of the main moves in markets:
Futures on the S&P 500 fell 1.2% as of 8:49 a.m. New York time
Futures on the Nasdaq 100 fell 1.7%
Futures on the Dow Jones Industrial Average fell 0.9%
The Stoxx Europe 600 fell 0.7%
The MSCI World index fell 0.5%
The Bloomberg Dollar Spot Index rose 0.3%
The euro fell 0.6% to $0.9737
The British pound fell 0.5% to $1.1111
The Japanese yen was little changed at 145.27 per dollar
Bitcoin fell 2% to $19,643.4
Ether fell 2.4% to $1,331.29
The yield on 10-year Treasuries advanced seven basis points to 3.90%
Germany’s 10-year yield advanced 13 basis points to 2.21%
Britain’s 10-year yield advanced eight basis points to 4.24%
West Texas Intermediate crude rose 0.8% to $89.13 a barrel
Gold futures fell 1% to $1,702.90 an ounce
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