Markets Rally After Strong Jobs Numbers – S&P up 1.5%
US stocks rallied well on Friday after non-farm payrolls data came in stronger than expected, easing growth concerns. The Dow added 1.39% on the day, the S&P 1.47%, and the Nasdaq finished up 1.51%. Treasury yields surged as traders pushed back Fed rate cut expectations to July, with the 2-year up 12.5 basis points to 3.824% and the 10-year up 9.1 basis points to 4.308%, whilst the dollar drifted, the DXY down 0.15% to 100.03. Oil prices fell to close out a tough week, down nearly 8%. Brent dropped 1.35% on the day to close at $61.29, and WTI fell 1.60% to $58.29. Gold traded in relatively tight ranges, ultimately finishing the day up just 0.06% at $3,240.08.
Jobs Numbers Push Fed Cuts Out
Friday’s strong employment data out of the US has pushed Federal Reserve rate cut expectations out further, as they confirmed that despite growth concerns due to tariffs, US employers are still adding to staffing numbers. It is only a couple of days until the conclusion of the next Fed meeting, and those (including certain high-profile people in office) will be disappointed that we are very unlikely to see any move this month—currently just a 3% chance of a cut. However, there is still the possibility that we see something in June, with a 35% chance of a cut currently priced in, whilst July looks most likely for the next move with those odds up to 55%. There is still a lot of water to come under the bridge before those meetings, and investors will now be looking at the message we get from Jerome Powell on Wednesday with regard to the FOMC’s thoughts, which could push markets hard one way or the other.
Holiday-Thinned Markets to Kick Off the Trading Week
Liquidity could once again be a bit of an issue in the first trading day of the week today, with some key financial centers having long weekends. The Asian session sees Japanese markets closed for both today and tomorrow, which will take a percentage of liquidity from the market—especially in the yen, which has been volatile in the last few days. And whilst there is no data scheduled for release, traders are expecting to see good moves after Friday’s data in the US. The London session will see the focus on Swiss markets, with key CPI data (exp. +0.2% m/m) due for release early in the session. However, liquidity will again be under question with UK markets closed for a bank holiday. The New York session has key US ISM Services PMI data out (exp. 50.2), with investors hoping for a good number to back up Friday’s jobs update.
