Bond yields fell yesterday as solid US jobs data reinforced the view that the Federal Reserve would raise interest rates gradually, while stock and currency markets were cautious ahead of an Italian constitutional reform vote tomorrow.
Crude futures rebounded on a weaker dollar, resuming a rise sparked by a cut in oil output agreed this week by the Organization of Petroleum Exporting Countries, the first since 2008. Russia also agreed to reduce production for the first time in 15 years.
The strength of the US November payrolls report had been seen as critical for the Fed to lift rates again for the first time in nearly a year.
The US unemployment rate slipped to 4.6 per cent last month, its lowest in more than nine years, but wages unexpectedly fell 0.1 per cent, dashing expectations of faster growth in household income that would fire up inflation.
After the wages data, longer-dated US Treasury yields retreated further from the near one-and-a-half-year peaks they reached on Thursday.
The benchmark 10-year Treasury note yield was down 5 basis points at 2.387 per cent and the German 10-year Bund yield fell 6 basis points to 0.293 per cent.
As bond markets took a breather from their massive selloff since Donald Trump’s US presidential win, global equities were on the back foot as investors took profits on a run-up on bets that tax cuts and less regulations which Mr Trump campaigned on would be enacted and spur faster economic growth.
The Dow Jones industrial average was up 1.33 points, or 0.01 per cent, to 19,193.26, the S&P 500 was up 6.24 points, or 0.28 per cent, to 2,197.32 and the Nasdaq Composite was up 23.40 points, or 0.45 per cent, to 5,274.50.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.73 per cent to 430.75.
The MSCI world equity index, which tracks shares in 45 nations, rose 0.15 per cent to 413.08.
Anxiety over the possibility of Italians rejecting Prime Minister Matteo Renzi’s referendum, which could fuel political instability in eurozone’s third-biggest economy, has caused choppy trading across European markets.
Europe’s broad FTSEurofirst 300 index dropped 0.16 per cent at 1,340.65.
The euro was down as much as 0.3 per cent at $1.0626 before recovering following the November US jobs report. The eurozone common currency was last up 0.1 per cent at $1.0670.
The dollar index was down 0.3 per cent at 100.74.
A weaker greenback helped reversed the oil market’s initial losses. Brent crude was last up 0.4 per cent at $54.16 a barrel. US crude was last up 0.6 per cent, at $51.34 per barrel.
Spot gold prices rose 0.4 per cent to $1,175.86 an ounce.