Treasury Bonds Fall on Strength in March Payrolls: Markets Wrap
(Bloomberg) — US Treasury bonds fell after a stronger-than-forecast reading on March employment prompted traders to pare bets on interest-rate cuts. Earlier, Asian stocks rose on optimism that shipping through the Strait of Hormuz will pick up despite the war in the Middle East.
The yield on the policy-sensitive two-year Treasury climbed 4 basis points to 3.84% and S&P 500 futures fell 0.3% in a holiday-shortened trading session. The US added 178,000 jobs last month, higher than all estimates in a Bloomberg survey. Most Group-of-10 currencies weakened against the dollar.
Stocks in Asia climbed, followed a recovery in US equities Thursday, on news that Iran is drafting a protocol with Oman to monitor traffic through the key waterway, having effectively shut it down since the start of the war. Trading was light in Asia with many key markets shut for holidays. Major European markets were also closed for the Good Friday holiday.
MSCI’s benchmark Asia Pacific Index gained 0.7%, with South Korea’s Kospi rising 2.7%, and Japan’s Nikkei 225 Stock Average climbing 1.3%. China’s CSI 300 Index reversed an earlier advance to drop 0.9%. Asian markets shut Friday included Australia, New Zealand, Hong Kong, Singapore, Taiwan, the Philippines and Indonesia.
The Treasury bond market is open for a half day while cash equity markets in the US are closed for Good Friday.
Oil rallied above $110 a barrel Thursday after President Donald Trump issued fresh threats against Iranian infrastructure in an effort to pressure Tehran in negotiations. West Texas Intermediate surged 11%, while the global Brent benchmark settled near $109.
“Markets are wary of what could happen over the weekend — especially the first weekend after” Trump’s prime time speech on Wednesday, said Rina Oshimo, a senior strategist at Okasan Securities Co. in Tokyo. “If attacks escalate or retaliations occur, oil prices could remain elevated for longer.”
War Pattern
The higher close for the S&P 500 on Thursday ran counter to a pattern of late-week selloffs that have hit the market ever since the war began, as nervous investors unwind positions that could be upended if weekend developments threaten to worsen the hit to the global economy.
“While assets gyrate on every new headline, until a clear agreement is achieved with a palatable plan for reopening the Strait, there’ll be downward pressure on economic growth and upward pressure on headline inflation,” said Max Gokhman, deputy CIO, Franklin Templeton Investment Solutions. “That spells indigestion for both equity and bond investors.”
Iran targeted more sites in Arab Gulf states overnight and into Friday. A container ship signaling French ownership exited the Strait of Hormuz on Friday, in what appeared to be the first known transit by a vessel linked to Western Europe since the Iran war all but shuttered the vital waterway.
Corporate News:
Microsoft Corp. announced a four-year, $10 billion investment package in Japan, part of the US company’s Asia-wide push to expand in a region hungry for artificial intelligence services. A group of private credit firms led by Blackstone Inc. has refused to extend another lifeline to software company Medallia, amping up pressure on owner Thoma Bravo to inject more equity into the troubled business or hand over the keys via a debt restructuring. Stellantis NV is discussing options for building electric vehicles in Canada with its Chinese partner, Zhejiang Leapmotor Technology Co., according to people familiar with the matter. Alibaba Group Holding Ltd. has released its third proprietary AI model in as many days, reinforcing the company’s intent to focus on profiting off its flagship artificial intelligence services. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.3% as of 9:15 a.m. New York time Nasdaq 100 futures fell 0.4% Futures on the Dow Jones Industrial Average fell 0.2% The MSCI World Index was little changed Cryptocurrencies
Bitcoin fell 0.3% to $66,704.7 Ether fell 1% to $2,047.83 Bonds
The yield on 10-year Treasuries advanced four basis points to 4.34% This story was produced with the assistance of Bloomberg Automation.
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