Global stock markets were under pressure on Friday as investors counted down to today’s US jobs report that could exacerbate or ease a selloff in global bond markets, while the dollar hovered near a two-year high.
Both Nasdaq futures and S&P 500 futures fell 0.3%. Wall Street was closed last night to mark the funeral of former US President Jimmy Carter.
The pan-European STOXX 50 futures and UK FTSE futures were flat.
The closely watched US nonfarm payrolls report will be released at 08:30 US Eastern time (1330 GMT). The median estimate is for an increase of 160,000 jobs in December with the unemployment rate holding at 4.2%.
Any strength could cause the 10-year Treasury yield to jump to a 13-month high and lift the US dollar in the process.
Analysts at ING believe a jobs figure below 150,000 will be needed to stop a further rise in Treasury yields.
“Payrolls, as always, is a very important report. But we will have to deviate significantly from the consensus to have an impact this time,” said Padhraic Garvey, regional head of Americas research, at ING.
“Given Treasury moves, there is talk that Friday’s numbers need to be strong to continue this momentum, and in this case there is some vulnerability to a lower yield reaction to the consensus outcome.”
In Asia, Japan’s Nikkei fell 0.9%, taking its weekly loss to 1.6%. MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 0.5% and was headed for a weekly decline of 1.2%.
China’s blue-chip shares slipped 0.4% and Hong Kong’s Hang Seng fell 0.5%.
Chinese government bond yields rose after the central bank said it had decided to temporarily halt purchases of sovereign bonds due to a shortage in bond supply.
Overnight, Philadelphia Fed President Patrick Harker said he expected the US central bank to lower interest rates, but added that an immediate rate cut was not necessary. Kansas City Fed President Jeff Schmid signaled reluctance to lower interest rates.
Markets have reduced expectations of a cut in US interest rates to around 43 basis points in 2025, while concerns over President-elect Donald Trump’s potential inflationary agenda have helped lift long-term yields.
Benchmark 10-year US Treasury yields rose 1.5 basis points to 4.6957%, just below the eight-month peak of 4.73% hit on Wednesday. The major chart level is 4.739% and if the level is broken, sellers will target the psychologically important level of 5%, which has not been seen since 2007.
The rise in Treasury yields – up about 9 bps on the week – has pushed the dollar index to 109.30, strengthening for the sixth straight week.
Worries about the UK economy have put the pound under pressure and delivered a particularly hard blow, pushing yields to their highest level in 16-1/2 years, although they have weakened slightly (GB10YT=RR).
The pound slipped 0.2% on Friday to $1.2278, after touching its lowest level since November 2023 overnight. It’s down 1.1% this week.
Oil prices rose on Friday. U.S. West Texas Intermediate crude futures rose 0.5% to $74.32 and were set for a weekly gain of 0.5%.
Gold prices rose 1.3% on the week to $2,674.44 an ounce, near the highest level since December.
Source: Reuters
