Stocks gain, US debt under pressure, according to bumper Jobs data from Reuters

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From Hideyuki Sano

TOKYO (Reuters) – Global stock prices rose to a 1 1/2 month high on Monday after data showed US employment spikes while US bonds came under pressure as the Federal Reserve may hike rates earlier than advertised.

US futures traded 0.5% higher, maintaining gains made during a shortened session on Friday, despite tech-heavy Nasdaq futures lagging and trading almost unchanged.

In Asia, it rose 0.8%, while the broadest MSCI index for stocks in the Asia-Pacific region outside of Japan was largely unchanged. China was closed on Tomb Sweeping Day and Australia on Easter Monday.

The MSCI All-Country World Index was almost unchanged, but was close to its highest level since late February and within sight of a record high this month.

The U.S. Department of Labor said Friday that the number of non-farm workers rose by 916,000 last month, the largest increase since last August.

That was well above the economists’ median forecast of 647,000 and closer to the whispering number of the markets of one million. The February data was also revised higher to show that 468,000 jobs were created instead of the previously reported 379,000.

“There will be more improvements in April as restaurants have started reopening. People expected economic normalization to happen sooner or later, but the pace seems to be accelerating,” said Koichi Fujishiro, senior economist at Dai- ichi Life Research.

While employment remains 8.4 million jobs below its February 2020 peak, an accelerating recovery raised hopes that all jobs lost during the pandemic could be restored by the end of next year.

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In turn, the prospect of a return to full employment raises questions about whether the Fed can stick to its promise to hold rates through 2023.

Markets have strong doubts as Fed fund futures are fully priced into a rate hike by the end of next year.

Many market participants also expect the Fed to attempt to cut its bond purchases this year, despite Fed officials saying they have not yet addressed the issue.

“It will be impossible for the Fed to avoid a rejuvenation discussion until the fall,” said Kozo Koide, chief economist at Asset Management One, noting that President Joe Biden’s infrastructure spending plan is likely to be approved by then.

The US Treasury’s two-year yield rose to 0.186% and hit a high of 0.194% near the end of the month in late February.

Longer-term bond yields also rose. In Asia, 10-year debt was up 1.725% on Monday, extending the surge that began on Friday after the job report.

The strong employment data helped support the dollar.

The greenback was trading at 110.57 yen, not far from Wednesday’s year-long high of 110.97. The euro was at $ 1.1767.

Gold fell 0.4% to $ 1,724.70.

In crypto assets, Ether fell 1.7% from its record high on Friday of $ 2,144.99 to $ 2,040.21. decreased 0.9% to $ 57,704.

Oil prices fell after OPEC + agreed last week to gradually relax some of its production cuts between May and July.

Futures fell 0.6% to $ 61.09 a barrel.

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