Treasuries Rise on Weak US Jobs, Dollar Holds Loss: Markets Wrap

(Bloomberg) — Treasuries rose across the curve after private-sector data signaled a cooling US labor market and bolstered bets on a Federal Reserve interest-rate cut.

The yield on the 10-year fell four basis points to 4.08% after employment figures from ADP Research signaled the labor market slowed in the second half of October, compared with earlier in the month. Money markets added to bets on Fed rate cuts, pricing roughly a 70% chance of a reduction next month. A gauge of the dollar was flat after five days of losses, while gold gained.

Asian shares rose along with US equity-index futures, with advancers outnumbering decliners seven to one on Japan’s Topix Index. Technology firms lagged, with SoftBank Corp. tumbling 5% after selling its stake in Nvidia Corp.

The US government’s closure has heightened the importance of private data, with investors deprived of key official indicators to gauge the strength of the economy. The record shutdown is now on track to end as soon as Wednesday, after the Senate passed a temporary funding measure that buoyed stocks as investors brace for a flood of delayed data once agencies reopen.

“As government functions resume, we expect a clearer read on the economic data, an important step for assessing the underlying strength of US activity,” said Rajeev De Mello, a global macro portfolio manager at Gama Asset Management. “Investor positioning is adjusting to a confluence of supportive factors.”

ADP’s most recent monthly report, released last week, showed private-sector payrolls increased 42,000 in October after declining in the prior two months.

The data come after an array of companies flagged plans to reduce headcount in recent weeks. A report from outplacement firm Challenger, Gray & Christmas Inc. showed employers announced the most job cuts for any October in more than two decades, spurring anxiety about the health of the labor market.

“The market will be guided by the general risk vibe and Fedspeak, but we suspect it will be unable to establish consistent directional impetus,” Westpac Banking Corp. strategists Damien McColough and Uma Choudhury wrote in a note.

The reopening of the government now depends on the House, which plans to return to Washington to consider the spending package. It would keep most of the government open through Jan. 30 and some agencies through Sept. 30.

If approved, the bill goes to President Donald Trump, who has already endorsed the legislation.

Back in 2013, which was the last shutdown to affect the jobs report, the government reopened on Oct. 17, and the September jobs report was released five days later, noted Jim Reid at Deutsche Bank.

The resumption of economic data releases could make the case for increased wagers on rate cuts. Most economists surveyed by Bloomberg suggest that Fed officials will lower borrowing costs by a quarter-point at their Dec. 9-Dec. 10 meeting. But the central bank’s path remained foggy after Chair Jerome Powell last month said a cut is not a certainty, a sentiment since shared by others at the Fed.

Recent US data “are consistent with the Fed continuing to reduce interest rates gradually at coming meetings,” analysts at Australia & New Zealand Banking Group, including Kishti Sen, wrote in a research note. Downside risks to many cohorts of the US economy are growing, they wrote.

Corporate News:

Advanced Micro Devices Inc., Nvidia Corp.’s nearest rival in AI chips, predicted accelerating sales growth over the next five years, driven by strong demand for its data center products. FedEx Corp. expects profit this quarter to improve from a year ago, easing investor concerns about a lackluster holiday season and volatile trade policies. A group of investors led by Macquarie Group Ltd. is expected to acquire infrastructure services business Potters Industries from private equity firm TJC, in a deal valuing the company at approximately $1.1 billion. JD.com Inc. said orders surged nearly 60% during this year’s Singles’ Day event. Sea Ltd.’s quarterly profit missed analysts’ estimates after the company boosted spending to battle competitors in Southeast Asia’s cutthroat e-commerce market. Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.2% as of 10:48 a.m. Tokyo time Japan’s Topix rose 1% Australia’s S&P/ASX 200 rose 0.2% Hong Kong’s Hang Seng rose 0.5% The Shanghai Composite was little changed Euro Stoxx 50 futures rose 0.2% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1579 The Japanese yen fell 0.1% to 154.32 per dollar The offshore yuan was little changed at 7.1205 per dollar Cryptocurrencies

Bitcoin rose 0.6% to $103,236.95 Ether rose 0.9% to $3,445.97 Bonds

The yield on 10-year Treasuries declined four basis points to 4.08% Japan’s 10-year yield was little changed at 1.685% Australia’s 10-year yield declined two basis points to 4.37% Commodities

West Texas Intermediate crude fell 0.2% to $60.91 a barrel Spot gold rose 0.2% to $4,133.80 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Winnie Hsu, Masaki Kondo and Matthew Burgess.

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