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Bond Yields Surge as Jobs Bolster Rate-Hike Bets: Markets Wrap

Storage tanks at the Torrance Refining Co. in Torrance, California, U.S., on Monday, Feb. 28, 2022. The U.S. and its allies are discussing a coordinated release of about 60 million barrels of oil from their emergency stockpiles after Russia’s invasion of Ukraine pushed crude prices above $100.

U.S. equities fluctuated and Treasury yields surged as a solid U.S. jobs report may strengthen the Federal Reserve’s case to use aggressive interest-rate hikes to tackle inflation.

The S&P 500 edged higher while the U.S. yield curve extended its recent flattening as investors evaluated the economic outlook amid tightening monetary policy and Russia’s war in Ukraine. The dollar gained as U.S. payrolls slightly missed expectations and the March unemployment rate fell to 3.6%. Meanwhile, an ISM manufacturing survey disappointed, with higher than expected prices paid.

“Although today’s job report was a little softer than expected, it still paints a picture of a steaming labor market,” said Seema Shah, chief strategist at Principal Global Investors. “The final vestiges of Covid-19 are close to being fully eradicated from U.S. economic data – the unemployment rate is just a touch above the pre-pandemic level and the number of people on temporary layoff is back to where it was before March 2020.”

Real yields threaten to climb to two-year high in push toward zero

Investors begin a new quarter wondering if the fighting in Ukraine, the isolation of Russia and the Fed’s increasingly hawkish turn will engender still more volatility and losses for stocks and bonds. Raw materials are the only key asset class to deliver major gains so far in 2022 as global stocks finished the quarter with their first loss since the pandemic bear market.

“The U.S. had great momentum in early 2022, but the outlook has darkened due to the Russia-Ukraine war, which is raising energy and food prices in the U.S. as well as globally,” Bill Adams, chief economist at Comerica Bank, said. “The shock to consumer prices, and to a lesser extent to exports, will weigh on the recovery in the rest of the year, and cautions against extrapolating from early 2022’s trend.”

Declines in oil priced moderated Friday as the U.K. is expected to join the U.S. in releasing more oil from its reserves as part of a joint effort to lower prices and reduce reliance on Russian supplies. Russia’s Gazprom PJSC has started telling clients how to pay for gas in rubles. Meanwhile, European Union leaders plan to tell President Xi Jinping in a virtual summit that China will hurt its global stature if it hands Russia an economic or military lifeline.

Russian stocks gained for a third day, the longest winning streak since trading resumed on March 24, as talks between Ukraine and Russia resumed. Russian Foreign Minister Sergei Lavrov said Moscow is preparing a response to Ukraine’s proposals on ending hostilities.

So far the Russian government has stayed current on its debt obligations. JPMorgan Chase & Co. processed a nearly $447 million payment for dollar debt due in 2030 on Thursday. Another deadline is approaching on April 4.

Just how frightening is yield-curve inversion? That’s the theme of the MLIV survey this week. Please click here to participate.

Some of the main moves in markets:


  • The S&P 500 rose 0.2% as of 10:55 a.m. New York time
  • The Nasdaq 100 rose 0.3%
  • The Dow Jones Industrial Average was little changed
  • The Stoxx Europe 600 rose 0.7%
  • The MSCI World index was little changed


  • The Bloomberg Dollar Spot Index rose 0.2%
  • The euro fell 0.3% to $1.1038
  • The British pound fell 0.2% to $1.3109
  • The Japanese yen fell 0.9% to 122.84 per dollar


  • The yield on 10-year Treasuries advanced nine basis points to 2.42%
  • Germany’s 10-year yield advanced four basis points to 0.59%
  • Britain’s 10-year yield advanced four basis points to 1.65%


  • West Texas Intermediate crude fell 0.3% to $99.99 a barrel
  • Gold futures fell 1.3% to $1,928.90 an ounce

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