Aurelia Butler

Investors acquired about $5.06 billion worth of U.S. bond funds during the week, the largest since the week ended May 8, according to LSEG data.Benchmark U.S. 10-year Treasury yields fell to a two-month low of 4.275% on Wednesday after a report showed that employers added fewer jobs in May than economists expected.Investors await the U.S. Federal Reserve’s meeting next week for insights on the potential for rate cuts this year. The European Central Bank and Bank of Canada both reduced interest rates earlier this week.US short/intermediate investment-grade funds saw upbeat demand as they drew about $1.53 billion, the largest weekly inflow since April 10.High yield funds accumulated a robust $1.15 billion, the fourth weekly inflow in five weeks.Meanwhile, demand for U.S. equity funds recovered partially as they received about $2.29 billion, the fifth weekly inflow in six weeks following about $7.45 billion worth of net selling in the week before.Large-cap funds secured a massive $4.2 billion in contrast to $1.12 billion in net selling, a week ago. Multi-cap funds also saw marginal purchases, but mid-, and small-cap funds suffered $639 million and $516 million worth of outflows.Among sectoral funds, utilities gained a sharp $966 billion, the largest weekly inflow since at list August 2020. Investors, meanwhile, withdrew $295 million out of the tech sector following two weekly net purchases in a row.Investors pumped $29.49 billion into money market funds in their largest weekly net buying since April 3. More

LONDON (Reuters) -Global stocks edged back from all-time highs on Friday and U.S. government debt yields jumped after unexpectedly strong U.S. monthly jobs data doused hopes the Federal Reserve would soon follow euro zone and Canadian interest rate cuts. The world’s largest economy added 272,000 new jobs last month, beating the 185,000 new hires predicted by economists and derailing an investor consensus that the jobs market had slackened by just enough to push consumer prices lower.MSCI’s world share index fell 0.2% after touching a record level on Thursday. Futures markets implied a cautious stock market open in New York as contracts on the S&P 500 share index fell 0.6%, with U.S. Treasuries taking most of the pain from a monthly non-farm payrolls report that markets read as inflationary. The benchmark 10-year U.S. Treasury yield, a benchmark for borrowing rates globally, was 13 basis points (bps) higher on the day after the jobs report at 4.4%. The two-year yield, which tracks interest rate expectations, rose by the same amount to 4.846%, following six straight days of declines until Thursday. Bond yields rise as prices fall. Money market pricing just after the payrolls data implied traders saw the Fed only starting to cut rates from their 23-year high of 5.25-5.5% by November. A September move had been strongly expected earlier in the day, particularly after the European Central Bank made a widely expected decision to cut its deposit rate from a record 4% to 3.75% on Thursday. “This is a strong report, and it suggests that there are no signs of any cracks in the labour market,” Spartan Capital Securities chief economist Peter Cardillo said. “It’s a plus for economy and a plus for corporate earnings but it’s a negative in terms of the prospects of a rate cut perhaps as early as September.”The Bank of Canada on Wednesday became the first G7 nation to trim its key policy rate, following cuts by Sweden’s Riksbank and the Swiss National Bank. The non-farms report also saw euro zone rate pricing go into reverse, with traders now pricing 55 bps of cuts in the region this year, from 58 bps before the data. Europe’s Stoxx 600 share index, which has gained almost 10% year-to-date, moved from trading flat for most of Friday into a 0.6% loss on the day. Euro zone bonds were also lacklustre on Friday, with Germany’s 10-year Bund yield rising 7 bps to 2.617%. Elsewhere, the dollar rose 0.6% against a basket of currencies, having been set for a weekly loss before the jobs data. The euro dropped 0.5% to $1.083 following a slight gain in the previous session. Brent crude oil futures rose 0.3% to $80.13 per barrel. Spot gold dropped 2.5% to $2,317.78 an ounce. More

(Reuters) – U.S. stock index futures dropped on Friday after a much stronger-than-expected employment report signaled that the labor market remains robust, dimming hopes of a September start to policy easing by the Federal Reserve. The Labor Department’s report showed Nonfarm Payrolls rose by 272,000 jobs in May, against expectations of an increase of 185,000. Average hourly earnings rose 0.4% on a monthly basis, compared to an expectation of 0.3% growth.Interest rate traders slashed bets on a September rate reduction, now seeing a roughly 56% chance, versus 68% before the data, according to the CME’s FedWatch tool”It’s the type of report that’s not going to cause the Fed to want to change the course that it has been on, which is to describe the need for higher interest rates and the potential for strong job creation to keep upward pressure on inflation,” said Brian Nick, senior investment strategist at The Macro Institute. However, the unemployment rate rose to 4% versus an expected 3.9%. Nonfarm Payroll numbers for April and March were also revised lower. “The fact that you have these two figures, saying such different things, makes it very hard for investors and even harder for central bankers to know exactly what’s going on,” Nick said. Rate-sensitive megacap technology stocks fell in premarket trading, on track to extend losses from Thursday’s session, with shares of Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Meta Platforms (NASDAQ:META) down between 0.3% and 0.5%. Markets have struggled to anticipate the Fed’s moves this year, as persistently strong economic data quickly dissipated expectations for rate reductions to begin as early as March.Friday’s numbers pointed to underlying strength in the U.S. labor market, offsetting a string of data over the past two weeks that indicated potential weakness and caused investors to increase bets on a September rate cut. Fresh inflation data is due next week, just before the Fed ends its two-day policy meeting on June 12. The central bank is expected to hold rates steady. Among individual names, GameStop (NYSE:GME) dropped 21.6% after announcing a potential stock offering and a drop in quarterly sales. The retailer’s shares had initially surged after stock influencer “Roaring Kitty” looked set to mark his return to YouTube. Other so-called meme stocks reversed gains, with AMC Entertainment (NYSE:AMC) and Koss Corp down 10.5% and 16.7%, respectively. Retail-focused trading platform Robinhood (NASDAQ:HOOD) gained 2.7%.At 8:46 a.m. ET, Dow e-minis were down 217 points, or 0.56%, S&P 500 e-minis were down 32.75 points, or 0.61%, and Nasdaq 100 e-minis were down 106.5 points, or 0.56%.Meanwhile, AI darling Nvidia (NASDAQ:NVDA) slipped 2.2%, on track to extend the previous session’s losses with its valuation dipping below the $3 trillion mark, behind that of Apple, again making it the world’s third most-valuable company. The chipmaker’s highly anticipated 10-for-1 share split is due after markets close, which could make the more-than-$1,000 stock cheaper for investors. Lyft (NASDAQ:LYFT) shares rose 2.3% following a forecast of 15% annual growth in its gross bookings through 2027 after markets closed on Thursday. More

The Labor Department said on Friday that the unemployment rate ticked up to 4.0% for the first time since January 2022, while nonfarm payrolls increased by 272,000 jobs last month, much more than the 185,000 forecast by economists polled by Reuters. Revisions showed 15,000 fewer jobs created in March and April combined than previously reported.MARKET REACTION:STOCKS: S&P 500 e-mini futures turned 0.29% lower, pointing to a soft open on Wall StreetBONDS: The U.S. Treasury 10-year yield jumped and was last at 4.414%; Two-year yields surged to 4.855%FOREX: The dollar index turned 0.61% higher, while the euro turned 0.62% lowerCOMMENTS:PADHRAIC GARVEY, REGIONAL HEAD OF RESEARCH, AMERICAS, ING, NEW YORK“It’s really quite difficult for the Fed to be anywhere near a rate cut…We see the odd weak reading in terms of activity, but then we come to the big numbers like payrolls and okay, the unemployment rate rose, I get that, it’s up to 4%, but that’s not high.”“There’s no urgency for the Fed to cut if the labor market is firm…we got a whole lot of stuff pointing to future weakness in the labor markets, but the reality is this is the most important employment print that we get. We just had it, it’s bang up to date, and it’s pretty strong.”QUINCY KROSBY, CHIEF GLOBAL STRATEGIST, LPL FINANCIAL, CHARLOTTE, NORTH CAROLINA”The report suggests continued resiliency in the labor market despite the rise in the unemployment rate… The market responded immediately with the Treasury yield inching higher and the equity futures market pulling back.The Fed may see these numbers as an obstacle for cutting rates in September because what a strong labor market leads to is a stronger consumer, a consumer that can continue to spend and fuel inflation.”BRIAN NICK, SENIOR INVESTMENT STRATEGIST, THE MACRO INSTITUTE, NEW YORK”It’s the type of report that’s not going to cause the Fed to want to change the course that it has been on, which is to describe the need for higher interest rates and the potential for strong job creation to keep upward pressure on inflation. But they’re not going to like the fact that the unemployment rate went up to 4%. That’s their year-end forecast and here we are with the May report that it’s already there.””The fact that you have these two numbers (payrolls and unemployment rate), are saying such different things, makes it very hard for investors and even harder for central bankers to know exactly what’s going on.””It is likely that we still get three interest rate cuts, because if the Fed is cutting in September because the unemployment rate is at 4.2% or 4.3%, then they’re probably going to start having to cut at every meeting.”CHRIS ZACCARELLI, CHIEF INVESTMENT OFFICER, INDEPENDENT ADVISOR ALLIANCE, CHARLOTTE, NORTH CAROLINA (emailed note)”The headline unemployment number is likely to get a lot of attention because it now has a 4-handle, but the greater-than-expected number of jobs created is the more important datapoint, in our opinion.”To those who are worried about inflation – especially the Federal Reserve – the report should raise concerns that wage pressure and sticky inflation is more likely to persist than be transitory.”We believe that the Fed is on hold at least until the election and may very well skip rate cuts for the entire year (our base case is still one 25 bps rate cut in December).”EUGENIO ALEMAN, CHIEF ECONOMIST, RAYMOND JAMES, FLORIDA”(The NFP) were surprising on the upside, but the unemployment numbers narrate a different view; there are discrepancies between the two. We will have to wait and see what the next couple of months look like because the Fed is not going to relent to lowering interest rates with such a strong labor market.”BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN“So much for slowing. The headline payrolls number is eye popping. The details? A little less so. There’s a chasm between the payrolls number being up 272,000 and the household survey’s employment number being down 408,000. There was also an outsized jump in the number of people working part time for non-economic reasons. It’s easy to poo-poo the strong headline number by saying it’s mostly driven by the non-cyclical health care and government segments, but the aggregate weekly payrolls gains across industries is pretty strong.”The Fed will take this to mean that they can still focus squarely on inflation without worry much about growth.”PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK“This is a hot number, and of course the part that is most interested to the Fed is the hourly wages, which rose more than expected on a year-to-year basis to over 4%.”“But this is a strong report, and it suggests that there are no signs of any cracks in the labor market.”“It’s a plus for economy and a plus for corporate earnings but it’s a negative in terms of the prospects of a rate cut perhaps as early as September.”“This report probably erases the hope of a September rate cut and pushes it back to maybe December.”“We have CPI next week and this is only one report but the fact that hourly wages went up on a  year-to-year basis that is not good news for the Fed.” More

(Reuters) -U.S. job growth accelerated far more than expected in May, keeping the Federal Reserve on track to hold off starting to cut interest rates until September at the earliest. The Labor Department’s closely watched employment report on Friday also showed the unemployment rate ticked up to 4.0% from 3.9% in April, breaking a symbolic threshold below which the jobless rate had previously held for 27 straight months. While the labor market has softened in recent months, its still-solid clip has allowed the Fed to take its time so far in deciding when to begin lowering borrowing costs.Nonfarm payrolls increased by 272,000 jobs last month, the Labor Department’s Bureau of Labor Statistics said. Revisions showed 15,000 fewer jobs created in March and April combined than previously reported. Economists polled by Reuters had forecast payrolls advancing by 185,000. Estimates ranged from 120,000 to 258,000.The U.S. central bank is expected to leave its benchmark overnight interest rate unchanged next week in the current 5.25%-5.50% range, where it has been since last July.There are some other signs though that the job market is beginning to loosen more steadily. The U.S. central bank is closely monitoring labor market conditions and economic growth to ensure it doesn’t keep rates too high for too long and overcool the economy as it tries to return inflation back to its 2% target.Overall economic output in the first quarter grew at the slowest rate in nearly two years and data so far in the current quarter on balance has been weaker than expected.Data earlier this week showed job openings declined in April and the number of available jobs per job-seeker reached its lowest level since June 2021. More

Nonfarm payrolls rose by 272,000 in May, surging from April’s revised lower 165,000 release, according to data from the Labor Department’s Bureau of Labor Statistics. Economists had called for a reading of 182,000.This was higher than the average monthly gain of 232,000 over the prior 12 months. Employment continued to trend up in several industries, led by health care; government; leisure and hospitality; and professional, scientific, and technical services.Average hourly earnings grew by 0.4% month-on-month, rising from 0.2% in April and above projections of 0.3%. The unemployment rate, meanwhile, rose to 4.0%, above the expected 3.9%. Cooling labor demand had been a key goal of the rate tightening cycle by the Fed, with policymakers hoping that the softening may alleviate upward pressure on inflation.There had been some signs earlier this week that the U.S. jobs market had been cooling, with weekly jobless claims coming in slightly above last week’s upwardly revised 221,000 on Thursday, and private payrolls as well as jobs opening below expectations.The U.S. Federal Reserve meets next week, and is widely expected to stand pat as the policymakers look for more information as to the strength of the economy.Markets had priced in nearly 50 basis points of Fed rate cuts this year prior to this release, with the first reduction seen in September. More

Standard DigitalWeekend Print + Standard Digitalwasnow $85 per monthBilled Quarterly at $199. Complete digital access plus the FT newspaper delivered Monday-Saturday.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts10 monthly gift articles to shareGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionEverything in PrintWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisPlusEverything in Premium DigitalEverything in Standard DigitalGlobal news & analysisExpert opinionSpecial featuresFirstFT newsletterVideos & PodcastsFT App on Android & iOSFT Edit app10 gift articles per monthExclusive FT analysisPremium newslettersFT Digital Edition10 additional gift articles per monthMake and share highlightsFT WorkspaceMarkets data widgetSubscription ManagerWorkflow integrationsOccasional readers go freeVolume discountFT Weekend Print deliveryPlusEverything in Standard DigitalFT Weekend Print deliveryPlusEverything in Premium Digital More