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GLOBAL MARKETS-Stocks gain, U.S. debts under pressure after bumper jobs data

Published 05-04-2021, 08:50 am
Updated 05-04-2021, 09:00 am
© Reuters.
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(Changes "showing" to "showed" in paragraph 1)

* U.S. stock futures rise 0.5%, Nikkei gains 0.8%

* U.S. debt yields up, markets bet on 2022 rate hike

* Global asset performance http://tmsnrt.rs/2yaDPgn

* World FX rates http://tmsnrt.rs/2egbfVh

By Hideyuki Sano

TOKYO, April 5 (Reuters) - Global stock prices rose to a 1 1/2-month high on Monday after data showed a surge in U.S. employment while U.S. bonds came under pressure on worries the Federal Reserve may bump up interest rates sooner than it has indicated.

U.S. S&P500 futures ESc1 traded 0.5% higher, maintaining their gains made during a truncated session on Friday though tech-heavy Nasdaq futures NQc1 lagged behind, trading almost flat.

In Asia, Japan's Nikkei .N225 rose 0.8% while MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was almost flat, with China closed for Tomb-Sweeping day and Australia on Easter Monday.

MSCI's all-country world index .MIWD00000PUS was almost flat but stood near its highest level since late February and within sight of a record high set that month.

The U.S. labour department said on Friday that nonfarm payrolls surged by 916,000 jobs last month, the biggest gain since last August. was well above economists' median forecast of 647,000 and was closer to markets' whisper number of one million. Data for February was also revised higher to show 468,000 jobs created instead of the previously reported 379,000.

"There will be further improvements in April, as restaurants have started to reopen. People have expected economic normalisation to take place sooner or later but its pace seems to be accelerating," said Koichi Fujishiro, senior economist at Dai-ichi Life Research.

While employment remains 8.4 million jobs below its peak in February 2020, an accelerating recovery raised hopes that all the jobs lost during the pandemic could be recouped by the end of next year.

The prospects of a return to a full employment, in turn, is raising questions about whether the Fed can stick to its pledge that it will keep interest rates through 2023.

Markets have strong doubts, with Fed funds futures FFZ2 FFF3 fully priced in one rate hike by the end of next year.

Many market players also expect the Fed to look into tapering its bond buying this year, even though Fed officials have said it has not discussed the issue yet.

"It will become impossible for the Fed to avoid discussing tapering by the autumn," said Kozo Koide, chief economist at Asset Management One, noting U.S. President Joe Biden's infrastructure spending plan is likely to be passed by then.

The two-year U.S. Treasury yield rose to 0.186% US2YT=RR , near its eight-month peak of 0.194% touched in late February.

Yields on longer-dated bonds also rose, with 10-year notes at 1.725% US10YT=RR in Asia on Monday, extending its rise that began on Friday after the job report.

The strong jobs data helped to underpin the dollar.

The greenback traded at 110.57 yen JPY= , not far from Wednesday's one-year peak of 110.97. The euro stood at $1.1767 EUR= .

Gold slipped 0.4% to $1,724.70 XAU= .

In crypto assets, ether ETH=BTSP slipped 1.7% to $2,040.21 from Friday's record peak of $2,144.99. Bitcoin eased BTC=BTSP 0.9% to $57,704.

Oil prices dipped after OPEC+ agreed last week to gradually ease some of its production cuts between May and July. crude futures CLc1 fell 0.6% to $61.09 per barrel.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates YTD

http://tmsnrt.rs/2egbfVh Global asset performance

http://tmsnrt.rs/2yaDPgn

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