Dollar and Treasury yields jump on US jobs data
The week ended with equity markets broadly positive as a small recovery in oil prices lifted energy stocks, while Treasuries remained under pressure ahead of a US jobs report that could fuel expectations the Federal Reserve will accelerate the pace of interest rate rises.
The US non-farm payrolls (NFP) report was due for release at 14:30 on Friday and unless it shows extremely weak jobs growth then the market will continue to consider the chances of a Federal Reserve rate hike next week as a sure thing.
As at noon the US equity index futures pointed to the S&P 500, which had fallen back after hitting a record high of 2,396 at the start of the month, will recover 9 points to 2,374. The Pan-European Stoxx 600 was up 0.4% as resources groups attract buyers, but interest rate sensitive sectors, like real estate, struggled.
Japan’s Topix index rose 1.2%, with gains across the board as exporters welcomed recent weakness in the yen. Australia’s S&P/ASX/200 rose 0.6% as financial stocks and the consumer staples sector gained. Hong Kong’s Hang Seng index added 0.3%, while on the Chinese mainland markets were mixed, with the Shanghai Composite index down 0.1% but the technologyheavy Shenzhen Composite index gaining 0.2
The US Dollar and Treasury yields have been rising in anticipation of tighter Fed policy. The 10-year Treasury yield was up 1bp to 2.61%, near its highest since September 2014, and the trend is contributing to a 1bp gain to 0.44% for equivalent maturity German Bunds. Gold which is not a fan of a stronger US currency and higher interest rates slipped 0.3% to $1,197 an ounce, its lowest price since the end of January.
The euro is continuing to rise following mildly hawkish remarks from European Central Bank president Mario Draghi on Wednesday.
This article was compiled by BOV Asset Management Limited, a member of the BOV Group. BOV Asset Management,TG Complex, Suite 2, Level 3, Brewery Str., Mriehel BKR 3000. Email: infoassetmanagement@bov.com Internet address: www.bovassetmanagement.com. BOV Asset Management is licensed by the MFSA.