Nasdaqfutures fell 0.6% and S&P futures fell 0.3%. These declines reflect market tension. The Japanese yen, which rose 2% at the beginning of the week, strengthened slightly against the dollar at 143.27.
The upcoming U.S. jobs report has gained traction after Federal Reserve Chairman Jerome Powell said further weakening in the labor market was undesirable. Analysts are forecasting 165,000 new jobs and a drop in the unemployment rate to 4.2%.
However, the recent softening of job openings and moderate employment growth in the private sector has raised the probability of the Fed cutting interest rates by 50 basis points this month to 42%. Following the report, Fed Governor Christopher Waller and New York Fed President John Williams are expected to give speeches. These speeches could provide immediate feedback to the market.
Analysts at ING said the market may be lowering its expectations for a big rate cut even if the employment data is in line with assumptions. Padhraic Garvey, head of research for the Americas at ING, said the market is preparing for a number below 100,000. If the actual number exceeds that, yields could be pressured higher.
Earlier in the week, bond markets rallied. Two-year Treasury yields fell 17 basis points to 3.7520%, the lowest level since early 2023. Ten-year yields also fell 18 basis points to 3.7330%, bringing the spread between the two-year yields to almost positive.
Oil markets are in for their worst week since October 2023. Brent crude futures settled at $72.8 a barrel today, up 0.2%. But they are down 7.6% for the week, approaching the critical $70-$71 price range. A drop below that threshold could lead to the lowest prices since late 2021.
Gold prices held steady at $2,514 an ounce, nearing a record high. In corporate news, Japanese retail giant Seven & i Holdings rejected a $38.5 billion cash takeover offer from Canada’s Alimentation Couche-Tard, saying it was not in the best interest of shareholders.
