The Friday Market Minute
- Global stocks extend declines ahead of the Friday jobs report as markets re-price bond yields in the wake of Fed Chair Powell's dovish take on inflation.
- Powell tells a WSJ jobs event that inflation pressures are likely temporary, noting the economy remains a long way from the Fed's goals on employment and price stability.
- Benchmark 10-year notes edge higher, to 1.582%, in overnight trading while the dollar jumps to the highest levels in more than three months.
- Senate clerks finish 11-hour reading of 628-page coronavirus stimulus bill, with amendments and tweaks expected to delay a full vote into the weekend.
- CDC data shows 82.5 million coronavirus vaccine doses have been administered as of yesterday, a pace of more than 2 million per day against a new case rate of around 55,000.
- Oil surges to the highest in nearly 2 years after OPEC and Russia agree to rollover their existing pact on production cuts through to the end of April.
- U.S. equity futures suggest a firmer open on Wall Street following a stronger-than-expected reading of February jobs growth from the Labor Department.
Wall Street futures edged higher Friday, with tech stocks attempting to climb out of correction territory, as investors re-set bond market yield levels in the wake of Federal Reserve Chairman Jerome Powell's dovish take on inflation and prepped for a key reading of February employment growth.
Gains were largely held in place after the Labor Department said 379,000 new jobs were created last month, a much bigger-than-expected total that clipped the headline jobless rate to 6.2%. The January tally was upwardly-revised, as well, to 166,000.
In essence, the Fed Chairman said current inflation expectations, which hit 2008 high earlier in the week, are likely to be temporary, adding that while the economy is improving, it's a long way from the central bank's goals on price stability and maximum employment.
Powell's remarks to a Wall Street Journal event in New York Thursday -- his final public comments before the Fed's next policy meeting which ends on March 17 -- prompted a six basis point spike in 10-year Treasury yields and pushed the Nasdaq Composite index into 275 point tailspin.
Benchmark 10-year notes climbed to 1.62% in early New York trading following the BLS release, while the assumption of higher market rates lifted the U.S. dollar index, which tracks the greenback against a basket of its global peers, to the highest levels since late November.
Inflation hawks were also noting a surge in global oil prices, which passed 14-month highs in overnight trading after OPEC members, along with Russia, agreed to roll over their current pact on production cuts until at least the end of April.
WTI contracts for April delivery were marked $1.37 higher from their Thursday close at $65.20 per barrel while Brent contracts for May delivery, the benchmark for global prices, surged another $1.65 to $68.40 per barrel.
And with the U.S. vaccination rate now accelerating past 2 million per day -- or around 35 times higher than the current rate of new infections -- and the Senate plodding its way towards passing President Joe Biden's $1.9 trillion stimulus bill, investors are now left with the dilemma of betting all-in on future growth or hedging that wager in the face of near-term inflation pressures.
Stock futures, meanwhile, are trading higher following the BLS release with contracts tied to the Dow Jones Industrial Average indicating a 200 point opening bell gain.
Contracts tied to the S&P 5500, which is up only 0.33% for the year, are priced for a 23 bump while the Nasdaq, which is down more than 10% from its February 12 closing high, is set for a 50 point advance.
Powell's remarks on rates, and a broader sense of risk average in the face of surging oil prices and a firmer U.S. dollar, weighed on global stocks, as well, with the MSCI ex-Japan index in Asia falling around 1% into the final hours of trading and the Nikkei 225 in Tokyo closing out the week with a 0.23% decline.
In Europe, firmer oil prices kept losses in check for the commodity-heavy FTSE 100, which fell just 0.1%, while the region-wide Stoxx 600 was marked 0.5% lower in the opening hours of trading.