Bonds calm as investors hope for weak US jobs data

LONDON (Reuters) – Bonds were calmer on Friday after a sell-off halted on concerns about “higher for longer” interest rates, helping stocks rise as investors hoped U.S. jobs numbers would fall.

The strong dollar is heading towards a 12-week winning streak after reaching its best level in about 11 months earlier in the week.

After talking about the oil price reaching $100 per barrel, the price of crude oil rose by 0.3% to $84.31, but it faces its largest weekly decline since March, with markets concerned that higher interest rates for a longer period will hinder global economic growth and harm… By demand for fuel.

Ten-year US Treasury bond yields settled at 4.746% after rising 55 basis points in a five-week sell-off that affected bond markets and risk appetite around the world.

Although the MSCI All-Country Stock Index (.MIWD00000PUS) was 0.2% higher, it has lost about 8% since its peak in July, leaving it about 7% ahead for the year.

Analysts said that investors are trying to understand the repercussions of the decline in oil prices, the large selling of bonds against the dollar, and the future path of interest rates.

“The market is in two minds at the moment,” said Mike Hewson, chief market strategist at CMC Markets.

In Europe, the Stoxx 600 index rose by 0.5%, rising for the second session in a row, but it is still heading towards incurring losses for the third week in a row after hitting a six-month low this week, reducing its gains for the year to 4%.

Analysts said US job growth is likely to slow moderately in September, while unemployment is likely to decline from a year-and-a-half high, highlighting the underlying strength of the economy amid growing headwinds heading into the year.

Nonfarm payrolls (USNFAR=ECI), due at 1230 GMT, are expected to rise by 170,000 jobs in September, with unemployment falling to 3.7% from 3.8%.

Patrick Spencer, vice president of equities at RW Baird, said the decline in bond prices, accompanied by an increase in the stock market’s “fear index” (.VIX), was historically more due to concerns about rising government deficits than expectations of more deficits. Rising prices.

“I definitely think it’s overdone. I think you’ve seen the peak in interest rates. We’re talking about duration, not higher rates,” Spencer said.

Firmer US stock futures were also supporting stocks in Europe.

“Today’s US labor market release will shape the near future, as the market’s response this week shows the importance of every piece of employment-related data,” UniCredit Bank analysts said.

Yen is more stable

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.85%. Tokyo’s Nikkei (.N225) fell 0.3%.

Another round of bond selling is likely to push the dollar forward along its longest streak of weekly gains on record against the euro. The dollar index has risen for 12 weeks in a row, matching a streak that lasted from July to October 2014.

The rally held the euro at $1.0548, near its lowest level in 11 months, and the pound is not far from its lowest level in seven months.

The dollar index stabilized on Friday at 106.4.

“A push through 107 would provide technical evidence of a continuation of the trend,” said Kyle Rodda, an analyst at Capital.com.

Surprisingly, only the beleaguered yen has shown much fight, since a sudden jump in the Japanese currency during the afternoon in London on Tuesday, fueling speculation that the authorities had intervened.

Japanese stock market data showed no anomalies of the kind that might accompany intervention. But the move was eye-catching enough to keep traders on their toes.

The yen settled in the latest trading at 148.92 to the dollar.

Gold also settled at $1,819 an ounce after nine days of losses driven by rising global bond yields.

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