Markets rally on strong U.S. jobs report Markets rally on strong U.S. jobs report

Markets rally on strong U.S. jobs report

Better-than-expected jobs numbers have breathed fresh air into stock and bond markets.

Markets rally on strong U.S. jobs report

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A stronger-than-expected jobs report from the U.S. Bureau of Labor Statistics has buoyed markets going into the weekend.

In September, the US nonfarm payroll employment increased by 336,000, which defied expectations and led to a surge in stock markets and Treasury yields, according to a report from the U.S. Bureau of Labor Statistics. The unemployment rate remained unchanged at 3.8 percent, demonstrating some stability in the labor market.

At press time the Dow Jones Industrial Average was up by 325ย  points, or 0.98%, while the S&P 500 and the Nasdaq Composite increased by 1.14% and 1.47% respectively. In the wake of this news, yields initially surged, with the 10-year Treasury rate trading near its highest level in 16 years. While the benchmark rate later eased from these levels, but was still up around 5 basis points at 4.769%.

The stronger-than-expected jobs data were welcomed by market players, shaking off initial concerns over a potential rise in Treasury yields. The U.S. economy added 336,000 jobs in September, far exceeding the 170,000 jobs that economists polled by Dow Jones had anticipated. Despite the significant job growth, wage growth remained below expected levels in the same month, underscoring the need for more balanced economic development.

Meanwhile, the Federal Open Market Committee (FOMC) confirmed in September that the benchmark interest rates would remain steady at 5.25% to 5.50%. Despite the steady interest rates, the Fed signaled a possible increase later in the year, potentially exceeding 5% until 2024, which was followed by an increase in short-term Treasury yields.

Federal Reserve Chairman Jerome Powell emphasized during a news conference following the Fed’s meeting that the central bank is still assessing whether inflation is falling sustainably. The Fed Chair noted that curbing inflation is critical to ensuring the health of the economy, and the strength demonstrated by the labor market allows the Fed to proceed cautiously.

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