Bonds & Stocks
Treasury yields climbed after a hotter-than-expected US jobs report bolstered speculation that bets on Federal Reserve rate cuts next year may have gone too far. All around Wall Street, the prevailing view is that while labor-market strength makes investors less anxious about a recession — at least for now — it also means the Fed might have to hold rates higher for longer. US two-year yields jumped 11 basis points to 4.71%. The dollar gained. S&P 500 contracts edged lower after a techfueled advance in the previous session.
Economy
The US labor market unexpectedly strengthened in November with pickups in employment and wages, deflating bets the Federal Reserve will cut interest rates early next year. Nonfarm payrolls increased 199,000 last month following a 150,000 advance in October, a Bureau of Labor Statistics report showed Friday. The return of striking auto workers helped boost the count by 30,000. The unemployment rate fell to 3.7% and workforce participation edged up. Monthly wage growth rose more than forecast.
World
The yen fluctuated, giving up most of Friday’s advance as focus shifted from speculation of a near-term policy shift by the Bank of Japan to US jobs data due later in the day. The currency fell about 0.4% to 144.62 against the dollar as of 11:30 a.m. in London after advancing as much as 1.1% earlier. The moves follow an almost 4% jump during the previous New York session. The outsized move Thursday may have been amplified by speculators closing bearish wagers on the yen, after leveraged funds boosted these to the highest level in more than a year last week. There were also suggestions that a lack of liquidity and algorithmic trading exacerbated the spike.