Global stock prices rose to a 1 1/2 month high on Monday after data showed a surge in US employment while US short-term bonds came under pressure as the Federal Reserve may hike rates earlier than advertised.
US S&P500 futures traded 0.5 percent higher, retaining gains made during a shortened session on Friday while the Japanese Nikkei rose 0.8 percent.
MSCI’s broadest index for stocks in the Asia-Pacific region outside of Japan was almost unchanged. China was closed on Tomb Sweeping Day and Australia on Easter Monday.
The MSCI All-Country World Index was almost unchanged, but was close to its highest level since late February and within sight of a record high this month.
The U.S. Department of Labor said Friday that the number of non-farm workers rose by 916,000 over the past month. This is the largest increase since last August.
That was well above the economists’ median forecast of 647,000 and closer to the whispering number of the markets of one million. The February data was also revised higher to show that 468,000 jobs were created instead of the previously reported 379,000.
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“The data confirmed that US economic activity is returning as coronavirus vaccinations are well underway,” said Masahiro Ichikawa, chief strategist at Sumitomo Mitsui DS Asset Management.
While employment remains 8.4 million jobs below its February 2020 peak, an accelerating recovery raised hopes that all jobs lost during the pandemic could be restored by the end of next year.
Again, the prospect of a return to full employment raises the question of whether the Fed can stick to its promise to hold rates through 2023.
Markets have strong doubts as Fed fund futures are fully priced into a rate hike by the end of next year.
“Markets are certainly not convinced that the Fed can be that relaxed when we have very strong employment data while the government is proposing another massive stimulus,” said Sumitomo Mitsui’s Ichikawa.
The Treasury Department’s two-year yield rose to 0.186 percent, hitting the end of the month high of 0.194 percent at the end of February.
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Longer-term bond yields were more subdued. The 10-year bond yield fell to 1.706 percent on Monday, giving up part of the 4 basis point increase seen on Friday after the job report.
The strong employment data helped support the dollar.
The greenback was trading at 110.72 yen, near the one-year high of 110.97 on Wednesday. The euro was at $ 1.1762.
In crypto assets, Ether was trading at $ 2,075.67, close to Friday’s record high of $ 2,144.99. Bitcoin was trading at $ 58,146 after gaining 4.3 percent last week.
Oil prices fell after OPEC + agreed last week to gradually relax some of its production cuts between May and July.
US crude oil futures fell 0.5 percent to $ 61.16 a barrel.