NEW YORK, April 8 — US Treasury yields and the dollar climbed in an abbreviated session yesterday after employment data for March indicated the labour market remained tight last month, raising the odds that the Federal Reserve has at least one more rate hike in store.
Wall Street exchanges were closed until Monday due to the Good Friday holiday. European markets are closed on both yesterday and Monday.
Nonfarm payrolls increased by 236,000 jobs last month, the Labour Department said, very close to the 239,000 expectated by economists surveyed by Reuters.
Data for February was revised higher to show 326,000 jobs were added instead of 311,000 as previously reported. The unemployment rate dipped to 3.5 per cent from 3.6 per cent in the prior month.
“The unemployment rate fell. I believe it’s the lowest since mid-2021. Year-over-year earnings slowed, but that’s kind of good news for the Fed,” said Kim Rupert, managing director of global fixed income at Action Economics in San Franciso.
“Nevertheless, the data are going to keep the Fed on track for a 25-basis-point hike in May,” Rupert said.
The CME’s emini S&P 500 futures contract EScv1 reversed a slight loss, closing up 0.23 per cent shortly after the jobs report. The dollar strengthened and US Treasury yields rose as expectations the Federal Reserve will hike rates at its May meeting increased.
Money market traders priced in a 67 per cent chance for a 25 basis point rate hike, up from 49.2 per cent on Thursday, according to CME’s FedWatch Tool.
MSCI’s gauge of stocks across the globe gained 0.044 per cent.
In Asia, Japan’s Nikkei share average rose on Friday, trimming its weekly decline, as a weaker yen and higher Wall Street close overnight boosted sentiment ahead of the payrolls report.
“While the headline number of payrolls is still elevated, hours are being cut with the index of aggregate weekly hours falling two months in a row,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments in Menomonee Falls, Wisconsin.
“The employment situation has gone from red hot to merely smoldering.”
Benchmark 10-year note yields were up 12.3 basis points to 3.413 per cent, from 3.29 per cent late on Thursday.
The two-year US Treasury yield, which typically moves in step with interest rate expectations, was up 17.2 basis points at 3.993 per cent.
The dollar index rose 0.137 per cent, with the euro down 0.09 per cent to US$1.091. — Reuters
