Stock futures rose and bonds fell as traders awaited key jobs figures for clues on the Federal Reserve’s next steps.
S&P 500 contracts rebounded, though the U.S. benchmark was still poised for a decline this week amid speculation the Fed would delay the start of rate cuts after solid economic data. A flare-up in geopolitical tensions also caused heightened volatility, with Brent oil trading above $90 a barrel. Treasury 10-year yields rose two basis points to 4.33 per cent. In the options market, traders were targeting a move to almost 4.5 per cent by the end of this week.
The government’s monthly employment report is expected to show about a 215,000 gain in nonfarm payrolls, which include private- and public-sector jobs. That pace, the median estimate in a Bloomberg survey, would be the slowest since November, following three solid months averaging 265,000.
Today the focus will be on the jobs report. The risk for this market remains for a ‘too hot’ report that shows strong job adds, low unemployment and hot wages. A number modestly below expectations would be welcomed as ‘Goldilocks’ and likely spur a rebound in stocks and bonds.
Rob Swanke at Commonwealth Financial Network: We’ve been seeing some cracks in the overall strong labour market, and this report will likely continue to see some softening in terms of the number of jobs added. Still, unemployment is expected to drop slightly — while the participation rate is expected to rise — which would be positive for the market.
Ian Lyngen and Vail Hartman at BMO Capital Markets: March’s employment situation report is broadly expected to reinforce the ongoing resilience of the labour market which has continued to afford the FOMC sufficient flexibility to push its higher-for-longer agenda.
Joe Davis at Vanguard: We expect that labor supply strength and job growth will continue for a good part of 2024 before gradually subsiding and the unemployment rate ending 2024 at around 4 per cent.
The Fed is on track to cut interest rates in June, according to Ellen Zentner, chief US economist at Morgan Stanley.
“It’s going to be more about inflation, if the Fed were to cut as early as May,” she told Bloomberg Television on Friday. “I think the bar is very high for them to go that soon though. But I do still expect them to be ready by June.”
Speaking from the same event, Nouriel Roubini, chairman of Roubini Macro Associates, highlighted the reversal of markets now being less optimistic on rate cuts than the Fed itself.
Corporate highlights:
- Tesla Inc. is slashing prices of its best-selling vehicle in a bid to clear its biggest-ever stockpile.
- The company is marking down Model Y sport utility vehicles it has in inventory, with the rear-wheel drive version going for $4,600 less than the cost to custom order the sport utility vehicle. Long-range and performance Model Ys are discounted by at least $5,000.
- Johnson & Johnson agreed to acquire Shockwave Medical Inc. for about $13.1 billion in enterprise value to bolster its expansion into making medical devices to treat heart disease.
- Apple Inc. laid off more than 600 employees in California as part of the decisions to end its car and smartwatch display projects, according to filings with the California Employment Development Department.
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.3 per cent as of 8:09 a.m. New York time
- Nasdaq 100 futures rose 0.4 per cent
- Futures on the Dow Jones Industrial Average rose 0.3 per cent
- The Stoxx Europe 600 fell 1.1 per cent
- The MSCI World index fell 0.3 per cent
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0841
- The British pound was little changed at $1.2639
- The Japanese yen was little changed at 151.37 per dollar
Cryptocurrencies
- Bitcoin fell 1.9 per cent to $66,631.73
- Ether fell 2.7 per cent to $3,235.4
Bonds
- The yield on 10-year Treasuries advanced two basis points to 4.33 per cent
- Germany’s 10-year yield advanced one basis point to 2.38 per cent
- Britain’s 10-year yield advanced three basis points to 4.05 per cent
Commodities
- West Texas Intermediate crude was little changed
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
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