Dow Jones Today: Stock Futures Rise Ahead of Highly Anticipated Jobs Report
Treasury Yields Rise, Rate Cut Expectations Fall
1 hr 11 min ago
Treasury yields jumped and the market’s expectations for interest rate cuts plummeted on Friday morning after the surprisingly strong jobs report dispelled some fears that the Federal Reserve needs to come to the rescue of a weakening labor market.
Market participants slashed their rate cut forecasts in the wake of the report. The odds of the Fed cutting rates by 50 basis points, or half a percentage point, at its next meeting in November slumped from 30% to about 5%, according to federal funds futures trading data. Market participants are now pricing in less than a 30% chance that the Fed will cut its benchmark rate by a total of 75 basis points by year’s end, which compares with the 56% odds that were priced in yesterday.
The readjusted expectations aligned Wall Street’s view with that of Fed officials, who in their quarterly economic projections forecast making modest rate cuts at each of its two remaining meetings this year.
Treasury yields soared in the wake of the report, with the 10-year yield jumping about 10 basis points to 3.95%, its highest level since mid-August. The yield on the 2-year Treasury, which is heavily influenced by the market’s expectations for the Fed’s benchmark interest rate, leapt 15 basis points to 3.87%, a one month high.
Major Index Stock Futures Higher Ahead of Jobs Data
3 hr 5 min ago
Futures tied to the Dow Jones Industrial Average were up 0.1%.
S&P 500 futures were up 0.3%.
Nasdaq 100 futures were up 0.4%.