(Bloomberg) -- The world’s biggest bond market rebounded after a rout that rattled trading around the globe, with investors gearing up for Friday’s jobs data that will help shape the outlook for Federal Reserve rates.
Treasuries climbed across the curve, with 30-year yields dropping from the highest since 2023. The bond market will close at 2 p.m. New York time in observance of a national day of mourning for former President Jimmy Carter. US stock markets are shut. Meantime, the pound dropped to a more than one-year low and gilts sank on concern the Labour government will struggle to keep the deficit in check as borrowing costs surge.
“While it might be tempting to extract some greater directional implications from this divergence, we’re content to point toward the magnitude of the recent selloff in Treasuries as so significant as to warrant a reprieve — even as the gilt market slips further,” said Ian Lyngen at BMO Capital Markets.
The monthly jobs report is seen as unlikely to alter the view of Fed officials that they can slow the pace of rate cuts amid a durable economy and inflation that’s dissipating only gradually. In the run-up to the data, traders waded through remarks from a raft of US policymakers.
Fed Bank of Philadelphia President Patrick Harker said officials are on track to lower rates this year, but the exact timing will depend on what happens with the economy. His Boston counterpart Susan Collins said a slower approach to adjusting interest rates is merited now as officials confront “considerable uncertainty” over the US economic outlook.
The yield on 10-year Treasuries fell four basis points to 4.65%. The dollar held steady. After a strong start to the new year that saw Bitcoin retake the $100,000 level, the original digital asset is struggling to maintain momentum. It hovered near $92,000 Thursday.
“While losing momentum, we are still projecting a relatively firm increase for job gain,” said Oscar Munoz and Gennadiy Goldberg at TD Securities. “We also look for the unemployment rate to stay unchanged at 4.2%, amid a likely loss of momentum in wage growth owing to favorable seasonal factors.”
They noted that a moderating, but still firm labor market report is unlikely to generate a strong reaction in markets.
Top Fed officials — including Chair Jerome Powell — are increasingly pointing to an obscure price gauge as a reason to maintain confidence in their outlook: “market-based” inflation.
The metric excludes a range of services where data-collectors can’t directly measure prices and have to estimate them instead. The result is a different inflation picture in recent months. Whereas the central bank’s preferred underlying inflation gauge accelerated to 2.8% in November, the market-based measure has been more or less flat at 2.4% since May.
“We think inflation is likely to trend lower in the first half of the year, keeping gradual cuts in place, before restrictive trade policies halt disinflation—and further Fed cuts — in the second half of the year,” said Michael Gapen at Morgan Stanley.
Corporate Highlights:
Jefferies Financial Group Inc.’s profit soared on a rebound in mergers and acquisitions and a surge in equity-trading revenue, signs that the multiyear dealmaking slump is coming to an end. The results came out on Wednesday.
Apogee Enterprises Inc. was upgraded to buy from neutral at Sidoti & Company LLC, which recommends taking advantage of recent weakness in the stock price.
A special committee of Seven & i Holdings Co.’s board is still considering takeover proposals by Alimentation Couche-Tard Inc. and the founding Ito family, although it doesn’t have enough information to evaluate them, Chief Financial Officer Yoshimichi Maruyama said.
India’s Tata Consultancy Services Ltd. reported earnings that missed analysts’ estimates, signaling overseas clients are still cautious in betting big on information technology projects.
Chinese developer Country Garden Holdings Co. proposed new terms with key banks that would slash its debt and lower borrowing costs, as the defaulted property firm inches toward an offshore restructuring.
Key events this week:
Japan household spending, leading index, Friday
US jobs report, consumer sentiment, Friday
Some of the main moves in markets:
Stocks
The MSCI World Index was little changed as of 9:30 a.m. New York time
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0310
The British pound fell 0.5% to $1.2302
The Japanese yen rose 0.3% to 157.81 per dollar
Cryptocurrencies
Bitcoin fell 2.2% to $92,345.7
Ether fell 1.9% to $3,236.3
Bonds
The yield on 10-year Treasuries declined four basis points to 4.65%
Germany’s 10-year yield was little changed at 2.54%
Britain’s 10-year yield was little changed at 4.79%
Commodities
West Texas Intermediate crude rose 0.5% to $73.69 a barrel
Spot gold rose 0.3% to $2,671.01 an ounce
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Andre Janse van Vuuren, Sagarika Jaisinghani and Chiranjivi Chakraborty.
