Bond Yields Inch Near 14-Year Peak Ahead of Jobs Report

Barry Adams
06 Oct, 2022
New York City

Stocks on Wall Street lacked direction and bond yields rose ahead of the non-farm payrolls report Friday. 

The bond yields rose in advance on the worries that the jobs report is likely to indicate labor market strength, providing one more signal to the Fed to stay the course on its rate hike campaign. 

The 10-year U.S. Treasury bond yield jumped to 3.8%, inching closer to 14-year high seen in September, as investors worry that the Fed may keep raising rates despite easing of price pressures and cooling of job market. 

The service sector and private sector reports Wednesday showed the healthy economic activities and strong labor market, fading the prospect of the Fed pivot to slower and smaller rate hikes. 

Initial jobless claims rose 29,000 to 219,000 for the week ended on October 1, the U.S. Department of Labor reported Thursday. 

Investors are keenly awaiting the monthly jobs report Friday and economists are expecting at least 270,000 net new non-farm jobs addition in September. 

The S&P 500 index declined 1.02% to 3,744.52 and the Nasdaq Composite index dropped 0.7% to 11,073.31. 

Oil prices traded near a 3-week high after OPEC and allies announced a production cut of two million barrels a day on Thursday. 

Crude oil increased $1.04 to $88.85 a barrel and natural gas edged down 2 cents to $7.05 a thermal unit. 

The yield on 2-year notes inched up to 4.26%, 10-year Treasury notes increased to 3.83% and 30-year bonds edged down to 3.79%.  

 

European Markets Fall On Weak Retail Sales

European markets traded lower after inflation jitters and rate hike worries resurfaced.

European markets traded sideways in the morning trading but turned lower following the weakness in New York. 

Indexes closed near their lows as investors focused on the UK debt rating cut and retail sales fell in the eurozone and Germany factory orders also declined. 

Bond yield also rose ahead of the U.S. jobs report Friday and investors are anticipating at least 270,000 net new job additions in September. 

The yield on 10-year German bonds rose to 2.1%, U.K. Gilts increased to 4.19%, French bonds edged up to 2.69% and Italian bonds inched higher to 4.519%.  

The DAX index fell 0.1% to 12,470.78, the CAC-40 index dropped 0.8% to 5,936.42 and the FTSE 100 index dropped 0.80% to 6,997.27.

The euro inched lower to 98.38 U.S. cents and the British pound declined to $1.124.  

Crude oil traded down despite yesterday's production cuts announced by the OPEC and allied nations. 

Brent crude oil gained 40 cents to $93.75 a barrel and natural gas futures fell 2% to 170.33 euros a megawatts an hour.

 

Stock Movers 

Shell PLC fell 3.2% to 26.31 after the energy giant said its natural trading and refining division is facing difficult times. 

Skanska AB gained 2.9% to 141.35 Swedish kroner after the company signed a deal with Metropolitan Transport Authority of New York to replace ageing escalators. 

Credit Suisse AG increased 2.6% to 4.22 Swiss francs after JP Morgan upgraded the stock to "neutral" from "underweight."

Imperial Brands gained 2.4% to 1,941.88 pence after the tobacco and cigarette company said fiscal 2022 performance is in-line with company's expectations. 

The company also announced a stock repurchase plan of one billion  pounds. 

Halma Plc gained 0.7% to 2,156.78 pence after the company said it has agreed to acquire Weetech Holding GmbH for