Friday’s monthly jobs report is expected to show that employers added 260,000 payrolls last month. The unemployment rate is seen holding at 3.7%, which is just above a five-decade low. The US central bank has not finished the task of bringing inflation down and is “quite a ways away” from pausing its campaign of rate increases, Minneapolis Fed President Neel Kashkari said.
His Cleveland counterpart Loretta Mester noted the US is in an unacceptably high inflation environment.
“The market needs to see the Fed start to accomplish the goals of 1) Declining inflation pressures, 2) A more balanced labor market and 3) A moderation of economic growth before we can credibly hope a Fed pivot is coming, and tomorrow’s jobs report will be one of the first major data points that can help further that hope (or dash it, again),” wrote Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter.
Read: Yellen Flags Need to Mind ‘Global Repercussions’ of Tightening
Investors counting on a Fed pivot any time soon are bound to get burned again, according to PGIM Fixed Income.
“We’ve seen this movie time and time again,” said Greg Peters, co-chief investment officer at the Newark-based firm, in an interview. “The market gets hyped up on different narratives between inflation releases. I’ve been surprised by it, and we’ve been using it as an opportunity to sell into.”
With the economy likely to slow down next year, tech stocks and US equities are looking more attractive, according to Citigroup Inc. strategists led by Robert Buckland. They expect 18% returns for global stocks by the end of 2023 but warn “it will likely be a volatile ride.”
Mortgage rates in the US fell, shifting direction after a six-week streak of gains that sent borrowing costs to a 15-year high. Even with the latest decline, mortgage costs have more than doubled since starting the year around 3% -- a steep climb that has slammed the brakes on the pandemic housing rally, highlighting one of the Fed’s goals in its effort to cool inflation.
Stock markets are still not entirely sold on Elon Musk’s $44 billion takeover of Twitter Inc. after the billionaire revived the deal at its original price earlier this week. Shares in the social media firm slipped further below Musk’s offer of $54.20 a share.
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Key events this week:
- US unemployment, wholesale inventories, nonfarm payrolls, Friday
- BOE Deputy Governor Dave Ramsden speaks at event, Friday
- Fed’s John Williams speaks at event, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 fell 0.3% as of 11:02 a.m. New York time
- The Nasdaq 100 was little changed
- The Dow Jones Industrial Average fell 0.4%
- The Stoxx Europe 600 fell 0.6%
- The MSCI World index fell 0.3%
Currencies
- The Bloomberg Dollar Spot Index rose 0.5%
- The euro fell 0.4% to $0.9843
- The British pound fell 1.2% to $1.1192
- The Japanese yen fell 0.2% to 144.89 per dollar
Cryptocurrencies
- Bitcoin rose 0.4% to $20,074.83
- Ether rose 1.6% to $1,367.32
Bonds
- The yield on 10-year Treasuries advanced seven basis points to 3.82%
- Germany’s 10-year yield advanced seven basis points to 2.10%
- Britain’s 10-year yield advanced 18 basis points to 4.21%
Commodities
- West Texas Intermediate crude rose 0.9% to $88.57 a barrel
- Gold futures were little changed
--With assistance from Srinivasan Sivabalan, Sujata Rao, Vildana Hajric and Isabelle Lee.