US Treasuries prices rallied, the US dollar fell and stock index futures fell yesterday after weaker-than-expected March US jobs data.
US Labor Department data showed employers added just 126,000 jobs in March, the smallest monthly increase in more than a year. The figure was well below forecasts for a gain of 245,000, according to a Reuters poll of economists.
Bond prices rose sharply, pushing the benchmark 10-year Treasury note yield to its lowest level in about two months, as the expectation for a Federal Reserve interest-rate rise by September diminished.
US equity index futures fell nearly 1.0 per cent, with S&P 500 E-mini futures dropping 19.75 points to 2039.75 in thin volume in a 45-minute abbreviated session, indicating a weak open for stocks on Monday.
“The sharply lower-than-consensus job creation for March is a reminder that the U.S. economic recovery is yet to reach escape velocity,” said Mohamed El-Erian, chief economic advisor at Allianz Se in Newport Beach, Calif.
Trading was thin yesterday due to the Good Friday holiday, as major US stock exchanges were closed, and the reaction in both US Treasuries and in US equity futures was affected by the light volume.
The sharply lower-than-consensus job creation for March is a reminder that the US economic recovery is yet to reach escape velocity
The benchmark 10-year Treasury rose 20/32 in price to yield 1.845 per cent, near a two-month low.
Major European markets are closed for the Easter holiday, reopening on Tuesday. Asian equity markets rallied in thin trading ahead of the Easter holiday and the US jobs figures.
The report weakened the US dollar, continuing a recent downturn in the greenback that followed a more than 20 per cent rally in the currency against major trading partners since mid-2014. With European economic data better than anticipated in recent weeks, the dollar’s recent sluggishness may have further to run.
The dollar index slid as much as 1.0 per cent to a low of 96.394 and was last at 96.716. Against the yen, the dollar fell to 119.02, or 0.7 per cent . The euro rallied 0.9 per cent to $1.0982. The US jobs data reduced the market’s expectations for a Federal Reserve interest rate increase by September.
Most Wall Street brokerages who deal directly with the Federal Reserve see that month as the likely moment for the Fed to raise rates, but the strong dollar, decline in oil prices and slower economic growth in Europe and Asia may mean the Fed could hold off longer.