Stock Futures Waver, Bond Yields Rise Ahead of Jobs Report

The yield on the benchmark 10-year Treasury note climbed above 1.6% for the first time since June on Friday, up from 1.57% Thursday. It then edged down to 1.58%.

The latest data on job growth in September is set to be released at 8:30 a.m. ET. Economists are projecting solid growth, expecting the end to federal Covid-related jobless benefits and reopened schools to have driven more workers back into the labor force. 

The Federal Reserve has said the labor market’s recovery is the key variable driving monetary policy and investors are watching closely to see if this report could affect plans to taper stimulus. 

“Today’s nonfarm payrolls are the focus of markets. Tapering is coming and is priced in by markets, so it would take a lot to surprise markets,” said Esty Dwek, chief investment officer at FlowBank. The range in which the numbers come out, without disrupting the Fed plans, is quite broad—it would take a lot for the market to think the Fed will deviate from that course.”

Stocks are on track for their best weekly performance in six weeks. Volatility returned to markets in recent days, with the S&P 500 swinging at least 1% for three out of four days this week. Investors were focused on surging energy prices, concerns about inflation and negotiations on the debt ceiling. Lawmakers struck a deal for a short-term extension to the debt limit in the Senate on Thursday, which helped boost market sentiment, investors said. 

“Any pullback we’ve seen attracts investors. It seems to us that any 1-3% fall in equity markets just has investors coming back in,” said John O’Toole, head of multiasset fund solutions at Amundi. “The relief rally that we’ve seen, that probably stays for a bit.” His strategy is also to wait for pullbacks to add equity risk, he said.

Oil prices rose, with global benchmark Brent adding 0.6% to trade at $82.45. The Energy Department rebuffed claims that it was planning to release strategic reserves of oil to counter the rise in energy prices. 

“This was the second news of the week where there was hope for additional supply; OPEC also stuck to its plan and didn’t release any additional production,” said Ms. Dwek. “There is underlying support for prices. The Covid story is fading and demand for energy, especially when we get into the winter, is going to stay up. It’s a concern for markets but I don’t think it will derail the recovery.” 

Overseas, the pan-continental Stoxx Europe 600 declined 0.1%. Among European equities, energy stocks gained on the back of the rise in crude prices. Eni added 1.5% and Equinor climbed 2.3%.

Most major benchmarks in Asia rose. Mainland China’s markets reopened after the Golden Week holiday, with the Shanghai Composite Index advancing 0.5%. Hong Kong’s Hang Seng Index added 0.3% while Japan’s Nikkei 225 climbed 1.3%.

Write to Anna Hirtenstein at [email protected]