US job growth explosion revives dollar, hits stocks and bonds

LONDON (Reuters) – Surprising U.S. job growth numbers on Friday exacerbated investor concerns that Federal Reserve interest rates will remain high for longer or even rise further, pushing the dollar higher and overshadowing stocks and bonds.

US nonfarm payrolls rose by 336,000 in September, far exceeding the consensus estimate of 170,000. The unemployment rate also remained unchanged at 3.8%, the highest level in 18 months.

US stock futures fell after the data release.

The dollar index, which rose after the figures were published, rose 0.5%, with the yen falling to nearly 150 yen to the dollar, as stock indexes in London (.FTSE) and Europe (.STOXX) pared their gains for the day. .

Simon Harvey, head of FX analysis at Monex Europe, said the “massive payrolls” numbers and an upward revision to August numbers would support the dollar’s ​​advance.

“Given today’s strength in employment numbers, markets cannot completely rule out the possibility of the Fed raising interest rates in the fourth quarter, even when this coincides with weaker wages data. This is likely to maintain support for the US currency, especially against rate-sensitive currencies.” Benefit.” Harvey said.

Before the data, the dollar was already heading toward a 12-week winning streak after hitting its best level in about 11 months earlier in the week.

Meanwhile, the euro was on track for a record 12-week decline against the dollar, in addition to additional gains made by the dollar.

US 10-year Treasury yields rose to 4.88% after rising 55 basis points in a five-week sell-off that sent Treasury prices down to 17-year lows and determined appetite for risk around the world.

After talk of oil reaching $100 a barrel, the price of crude oil fell 0.4% to $83.72, and is believed to still face its biggest weekly decline since March, as markets worry that higher interest rates for a longer period will hamper global economic growth and hurt demand. On fuel.

News that the Russian government has lifted a ban on diesel exports via port pipelines also led to a decline in oil prices.

Euro zone bond yields rose, while the closely watched gap between German and Italian borrowing costs – an indicator of stress in Italian finances – reached its highest levels since March.

Global bond funds recorded massive weekly outflows.

The MSCI All-Country Index (.MIWD00000PUS) fell. It has lost about 8% since its peak in July, leaving it ahead by about 7% this year.

In Europe, the STOXX 600 Index (.STOXX) also lost previous gains, falling 0.1% after the US data. It is on track for a third straight week of losses after hitting a six-month low this week, trimming its gains for the year to 4%.

Yen hour

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.85%. Tokyo’s Nikkei (.N225) fell 0.3%.

Another round of bond selling is likely to push the dollar forward along its longest streak of weekly gains on record against the euro. The dollar index has risen for 12 weeks in a row, matching a streak that lasted from July to October 2014.

The rally held the euro at $1,049, near an 11-month low, and the pound fell 0.6%, not far from a seven-month low.

The dollar index rose 0.5 percent to 106.91.

“A push through 107 would provide technical evidence of a continuation of the trend,” said Kyle Rodda, an analyst at Capital.com.

Japanese stock market data showed no anomalies of the kind that might accompany intervention. But the move was eye-catching enough to keep traders on their toes.

The yen was trading in the last session at 149.43.

Gold fell 0.3 percent to $1,813 an ounce after nine days of losses driven by a rise in global bond yields.

Our standards: Thomson Reuters Trust Principles.