U.S. stock futures rally, yields jump, after hot payroll data
U.S. equity index futures advance: Nasdaq 100 up >1%
Sep non-farm payroll 254k vs 140k estimate
Euro STOXX 600 index up ~0.5%
Dollar, crude rally; bitcoin up >1.5%; gold dips
U.S. 10-Year Treasury yield jumps to ~3.94%
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U.S. STOCK FUTURES RALLY, YIELDS JUMP, AFTER HOT PAYROLL DATA
U.S. equity index futures have added to gains after the release of the latest data on U.S. employment. E-mini S&P 500 futures ESc1 are now up around 0.8% vs a gain of around 0.3% just before the data came out.
The September non-farm payroll headline jobs number came in at 254k which was well above the 140k estimate. Of note, the prior headline jobs read for August was revised up to 159k from 142k.
The unemployment rate came in at 4.1% vs a 4.2% estimate, and 4.2% last month.
Wage data, on a month-over-month and year-over-year basis, were hotter than expected:
According to the CME's FedWatch Tool, there is now around a 90% chance that the FOMC cuts rates by 25 basis points at its November 6-7 FOMC meeting vs around 70% before the numbers came out. The probability the Fed slashes rates by 50 basis points has fallen to around 10% vs around 30% prior to the release of the numbers.
Looking toward year-end 2024, the market is now showing a bias for rates to be in the 4.25%-4.50% area vs 4.00%-4.25% just before the data. The current target rate is 4.75%-5.00%.
The U.S. 10-year Treasury yield US10YT=RR is jumping to around 3.94% vs 3.87% just before the payroll data was released. The yield ended at 3.85% on Thursday.
A majority of S&P 500 .SPX sector SPDR ETFs are higher in premarket trade with tech XLK.P, up about 1.5%, posting the biggest rise.
The SPDR S&P regional banking ETF KRE.P is up around 1.7%.
Regarding the jobs data, Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin, said:
“A pleasant surprise to the upside, but mentally the Fed is shaving about 68,000 from the headline payrolls number. This is because the Bureau of Labor Statistics has not yet revised their numbers from their latest benchmarking study. August payrolls are also the ones most often revised because there are all sorts of issues with people going back to school."
Jacobsen added "Despite the large upside surprise to the payrolls number, the aggregate weekly hours worked fell 0.1%. This could be because of Hurricane Helene, which wreaked havoc during the survey week."
"Unless we see a big downside surprise with the November 1st report for October, the Fed will take this as a reason to cut only 25 bps."
Here is a premarket snapshot:
(Terence Gabriel, Chuck Mikolajczak)
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FOR FRIDAY'S EARLIER LIVE MARKETS POSTS:
ROOM FOR OPTIMISM OVER EU/UK EXPORTERS - BARCLAYS - CLICK HERE
MARKETS "OBSESSING" OVER JOBS DATA - CLICK HERE
FRANCE AND ITALY TARGET COMPANIES TO SHRINK DEFICIT: WHAT IT MEANS - CLICK HERE
STOXX IN POSITIVE TERRITORY AS REAL ESTATE AND OIL JUMP - CLICK HERE
EUROPE MARKETS HEAD FOR MIXED START; MIDDLE EAST IN FOCUS -CLICK HERE
MIDDLE EAST TENSIONS DRIVE OIL PRICES - CLICK HERE
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