Stock futures flat in tension awaiting US payrolls: Markets wrap

(Bloomberg) — U.S. stock futures were flat on Friday as traders eyed the pivotal U.S. jobs report for more clues on whether the labor market is cooling quickly enough to enable the Federal Reserve to cut interest rates. Bonds fell.

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Futures for the S&P 500 and Nasdaq 100 were little changed after enthusiasm over artificial intelligence and the prospects for big technology companies pushed the indexes up 0.8% and 1.5%, respectively, on Thursday. Treasuries fluctuated ahead of the jobs report, with the 10-year yield rising to 4.18%, after falling from 4.25% at the start of the week.

Friday’s nonfarm payrolls report is crucial for traders evaluating whether bets on a significant Fed policy easing next year are justified — or have gone too far. On signs that inflation and wage growth are easing, traders have fueled their bets on cuts of at least 1.25 percentage points over the next 12 months. That’s more than double what Fed officials themselves said, who while signaling they are likely done raising interest rates, were also quick to warn that any talk of cuts is premature for now.

“There is a more optimistic view on 2024, a feeling that the battle against inflation has been won and that interest rates will fall. The question now is how quickly we will have interest rates,” said Gerry Thomas, global IT director for equities at Saracen & Partners. “Very high compared to where people think inflation will be, which means all eyes are on the jobs data.”

Payrolls likely grew by 183,000 last month, after a 150,000 increase in October, while the unemployment rate remained steady at 3.9%, according to the median forecast of economists surveyed by Bloomberg.

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Fund managers pulled $4.8 billion out of Treasuries, the largest weekly outflow since August 2022, in the run-up to the labor market report, according to EPFR Global data.

Bond traders race ahead of the Fed and face the reality of jobs data checks

The resolution of the United Auto Workers strike in the United States will boost nonfarm payrolls for November, but a weaker household survey will be more revealing of rapidly slowing conditions in the labor market, according to Anna Wong and Stuart Paul of Bloomberg Economics.

“It is difficult for job seekers to find work, and long periods of unemployment usually lead to sustained increases in the unemployment rate later on,” they wrote in a report. “Our view is that the recession likely started in October.”

Elsewhere, the European Stoxx 600 added 0.4%, maintaining the index’s pace for a fourth week of advance.

In currency trading, the dollar had a mixed performance against major currencies. The yen erased the advance that took it to its strongest level since August on fueling speculation that the Bank of Japan will begin raising its benchmark interest rate below zero soon.

In commodities, oil advanced, but remained on course for its longest weekly losing streak since 2018 on concerns about a global glut. Gold is on track to record its first weekly decline in four weeks.

Main events this week:

Some key movements in the markets:

Stores

• S&P 500 futures were little changed as of 6:09 a.m. New York time

• Nasdaq 100 futures were little changed

• Dow Jones Industrial Average futures were little changed

• The Stoxx Europe 600 index rose 0.4%.

• The MSCI World Index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed

• There was little change in the euro at $1.0785

• The British pound fell 0.1 percent to $1.2578

• The Japanese yen fell 0.3 percent to 144.53 yen to the dollar

Digital currencies

• Bitcoin was little changed at $43,391.01

• Ethereum fell 0.5% to $2,359.03

Bonds

• The yield on 10-year Treasury bonds rose by three basis points to 4.18%.

• The yield on German 10-year bonds rose by five basis points to 2.24%.

• The yield on British 10-year bonds rose seven basis points to 4.04%.

Goods

This story was produced with assistance from Bloomberg Automation.

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