Quiver Quantitative - Amid concerns about how upcoming data may impact interest rates, U.S. equities leaned towards a lower close as the S&P 500 fluctuated above a crucial support point. A potential boost in Friday's monthly non-farm payrolls could lead to increased yields and a further stock decline. Tom Essaye, founder of The Sevens Report newsletter, highlighted the significance of the job data, suggesting it could greatly influence the S&P 500's trajectory. Concurrently, Levi Strauss (LEVI) shares dropped 3.5% in after-hours trading due to a decline in expected sales and a trimmed annual revenue projection.
The U.S. 10-year bond's yield retreated slightly to 4.7%, after having recently soared to a 16-year peak near 4.88%. The 30-year yield, having brushed the 5% mark, approached 4.9%. The main focus for Wall Street has been the ascending borrowing costs, with 5% considered a plausible target for long-term U.S. government bonds. However, some financial experts are now floating the idea of a 6% yield.
In the run-up to the Federal Reserve's November policy gathering, remarks from current and previous Fed officials have grabbed attention. Richmond Fed President, Thomas Barkin, commented on the transition back to standard interest rates seen in prior years, whereas San Francisco Fed's head, Mary Daly, alluded to a potential rate pause given specific economic conditions. Despite recent market stabilization, investors are anxious to discern if the labor data will influence the Federal Reserve's decisions for November. Currently, a 25% probability of a Fed rate hike in November is anticipated through swaps.
Lastly, global bonds face a future decline unless a persistent dip in equities renews the appeal of fixed-income assets, as per Barclays (LON:BARC) Plc analysts. They stressed that no particular yield level guarantees a lasting bond rally. The market also saw oil prices drop, with WTI crude dipping below $83 per barrel, its lowest since late August.
This article was originally published on Quiver Quantitative