(Bloomberg) — U.S. equity futures were steady Friday as traders awaited a key U.S. jobs report for more evidence on whether the labor market is cooling fast enough for the Federal Reserve to cut interest rates. The bonds slipped.
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Both benchmarks were little changed after the S&P 500 and Nasdaq 100 indexes traded up 0.8% and 1.5%, respectively, in contracts Thursday following enthusiasm about artificial intelligence and Big Tech prospects. Treasuries faltered ahead of the jobs report, with the 10-year yield rising to 4.18%, after falling from 4.25% at the start of the week.
Friday’s nonfarm payrolls report is important for traders to evaluate whether bets on dramatic Fed policy easing next year are justified — or gone too far. Encouraged by signs of slowing inflation and wage growth, traders are betting a cut of at least 1.25 percentage points could happen over the next 12 months. That’s more than twice as much as Fed officials themselves, who have signaled they are likely to raise rates while also warning that any talk of a cut is premature.
“There is a more optimistic outlook on 2024, a sense that the fight against inflation has been won and interest rates will come down. The question now is how soon, said Jerry Thomas, global CIO of equities at Sarasin & Partners. “We have interest rates so high, people wonder where inflation will go, which means all eyes are on the jobs data.” Are.”
Payrolls likely rose by 183,000 last month, after rising by 150,000 in October, while the unemployment rate remained steady at 3.9%, according to the average forecast of economists surveyed by Bloomberg.
Fund managers pulled $4.8 billion from Treasuries ahead of the labor market report, the largest weekly outflow since August 2022, according to EPFR Global data.
Bond Traders Ahead of Fed Face Reality Check on Jobs Data
The resolution of the United Auto Workers strike in the US will boost November non-farm payrolls, but a weak household survey will reveal sharply cooling conditions in the labor market, according to Anna Wong and Stuart Paul at Bloomberg Economics.
“It is harder for job seekers to find work, and longer periods of unemployment usually lead to a sustained increase in the unemployment rate later on,” they wrote in a report. “Our view is that the recession is likely to begin in October.”
Elsewhere, Europe’s Stoxx 600 index rose 0.4%, maintaining the pace of a fourth week of gains for the benchmark.
In currency trading, the dollar was mixed against major rivals. The yen erased the gains that had taken it to its strongest since August amid fuel speculation the Bank of Japan will soon start lifting its sub-zero benchmark rate.
In terms of commodities, oil gained, but continued its longest weekly decline since 2018 on concerns about a global glut. Gold is headed for its first weekly decline in four weeks.
Major events of this week:
Some key movements in the markets:
S&P 500 futures were little changed at 6:09 a.m. New York time
Nasdaq 100 futures little changed
Futures on the Dow Jones Industrial Average were little changed.
Stoxx Europe 600 rose 0.4%
The MSCI World Index was little changed
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0785
The British pound fell 0.1% to $1.2578
The Japanese yen fell 0.3% to 144.53 per dollar
Bitcoin was little changed at $43,391.01
Ether fell 0.5% to $2,359.03
Yields on 10-year Treasuries rose three basis points to 4.18%
Germany’s 10-year yield rose five basis points to 2.24%
UK 10-year yield rose seven basis points to 4.04%
This story was generated with the assistance of Bloomberg Automation.
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