Stocks were mixed and Treasuries fluctuated before US employment data that will be scrutinized for clues on the path for Federal Reserve interest rates.
Contracts for the S&P 500 and Nasdaq 100 indexes both gained, setting US stocks on course to trim their biggest weekly decline since March. The advance in futures was helped by gains of around 9% in after-hours trading for Amazon.com Inc. following robust results. That helped to offset a nearly 3% drop in post-market trade for Apple Inc., which undershot revenue expectations. Europe’s Stoxx 600 index was little changed.
Friday’s non-farm payrolls figures are forecast to show the US added 200 000 jobs in July. While that would be the weakest print since the end of 2020, it’s still a strong historically and a number exceeding that may fuel bets on more Fed hikes. A report Thursday underscored resilient US demand for workers and the mood in markets remains cautious.
“With NFP still to come, I shouldn’t think investors are too willing to jump in with both feet just yet,” said James Athey, investment director at Abrdn.
Longer-dated Treasury yields were steady, but still on pace for their worst week of 2023. The benchmark 10-year note was little changed at around 4.18% after soaring 10 basis points on Thursday to a fresh nine-month high as investors digested news of $103 billion in upcoming US debt issuance — and concerns about the ability of the market to absorb supply.
Meantime, rate options traders are paying up for protection against further increases in long-maturity Treasury yields. A metric that compares demand for bearish put options to demand for bullish call options shows the widest divergence since September for options on CME Group Inc.’s US Treasury Bond Futures contract, which currently tracks a bond that matures in 2039. The gaps are less extreme for options on shorter-maturity Treasury futures.
The steepening of the yield curve extended a trend since the Bank of Japan surprised markets last week with a policy tweak. At 4.88%, two-year yields are 71 basis points higher than those on the 10-year note. That’s compared to a gap of 102 basis points two weeks ago.
In Asia, equities in China and Hong Kong were helped by signs of official support for the private sector. The People’s Bank of China said it will step up its monetary support for the economy and help banks control liability costs at a Friday briefing. The comments followed a statement from the central bank in which it said it would increase funding support for the private sector after meeting with executives from the property industry.
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 was little changed as of 8:16 a.m. London time
- S&P 500 futures rose 0.2%
- Nasdaq 100 futures rose 0.4%
- Futures on the Dow Jones Industrial Average were little changed
- The MSCI Asia Pacific Index was little changed
- The MSCI Emerging Markets Index was little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0948
- The Japanese yen was unchanged at 142.58 per dollar
- The offshore yuan was little changed at 7.1880 per dollar
- The British pound was little changed at $1.2710
Cryptocurrencies
- Bitcoin fell 0.4% to $29 158.68
- Ether fell 0.6% to $1,831.51
Bonds
- The yield on 10-year Treasuries was little changed at 4.18%
- Germany’s 10-year yield advanced one basis point to 2.62%
- Britain’s 10-year yield was little changed at 4.47%
Commodities
- Brent crude rose 0.2% to $85.27 a barrel
- Spot gold was little changed
© 2023 Bloomberg
