Treasuries Rally As Bleak Jobs Spur Fed-Cut Bets: Markets Wrap
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Treasuries rally as bleak jobs spur Fed-Cut bets. Strong evidence of a cooling US labor market rippled through Wall Street, spurring a rally in bonds as traders boosted their bets the Federal Reserve will cut interest rates in December. The dollar fell. Stocks wavered.
With the scarcity of data caused by the federal shutdown, investors have turned to private readings such as the Challenger, Gray & Christmas Inc. report showing companies announced the most job cuts for any October in over 20 years. Following the numbers, money markets now imply an about 60% chance of a quarter-point rate reduction next month.
“We are sticking to our view that the Fed will deliver a follow-up 25 basis-point cut in December because restrictive Fed policy can worsen the already fragile employment backdrop and upside risk to inflation are not materializing,” said Elias Haddad at Brown Brothers Harriman & Co.
Traders are also keeping a close eye on a slate of policymakers slated to speak on Thursday. Fed Bank of Chicago President Austan Goolsbee told CNBC that a lack of inflation data during the shutdown makes him more uneasy about continuing rate cuts.
The US central bank last month lowered rates for a second straight meeting in an effort to bolster the labor market. But inflation, which at 3% in September remained well above the Fed’s 2% target, has also raised concerns among some officials that it will take longer to come down than they thought.
The S&P 500 was little changed. The yield on 10-year Treasuries slid five basis points to 4.10%. A dollar gauge fell 0.2%.
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