(Bloomberg) — The Treasury market saw a drop in yields for most maturities as data showing further weakness in the US labor market reinforced the case for the Federal Reserve to cut interest rates this year.
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In the run-up to Friday’s US jobs report, data showed American companies added workers at a more moderate pace in June and wage growth cooled. Separately, recurring applications for jobless benefits rose for a ninth straight week, the longest stretch since 2018 that indicates a growing number of people are having difficulty finding a new job. The two reports came a day after a solid reading on job openings.
“This week’s jobs data has been a mixed bag — jobless claims and private payrolls suggest the labor market may be loosening up, but job listings and job cuts point in the other direction,” Chris Larkin at E*Trade from Morgan Stanley. “Even if Friday’s jobs report and next week’s inflation numbers come in on the cool side, it may not be enough to nudge the data-dependent Fed into rate cuts any sooner than September.”
Treasury 10-year yields fell three basis points to 4.4%. The S&P 500 fluctuated after the benchmark gauge notched its 32nd record this year. Markets are due to close earlier ahead of Thursday’s US holiday.
Fed policymakers will get further insight into the state of the labor market Friday with the release of the monthly employment report. Economists anticipate a 190,000 gain in nonfarm payrolls, which include private- and public-sector jobs, a step-down from the previous month.
Fed Bank of New York President John Williams, who has deeply researched the natural rate of interest known as r-star, pushed back against recent commentary that it has risen since the pandemic.
The idea of a long-run natural rate of interest, which prevails when the economy is not responding to shocks and is growing at its potential, is central to monetary policy but cannot be directly observed. Officials aim to raise rates above the neutral level to cool the economy and fight inflation.
Corporate Highlights:
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Jeff Bezos disclosed a plan to unload 25 million additional shares of Amazon.com Inc. worth $5 billion on the day the stock hit a fresh record.
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Independent film and TV producer Skydance Media has reached a preliminary agreement to buy Shari Redstone’s National Amusements Inc. and merge with Paramount Global, the parent of CBS and MTV, according to a person with knowledge of the matter.
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Dell Technologies Inc. was added to Bank of America Corp.’s US 1 list — a collection of the firm’s best investment ideas drawn from buy-rated, US-listed stocks.
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Southwest Airlines Co. has adopted a shareholder rights plan to defend against a push for a leadership overhaul and other changes by activist firm Elliott Investment Management.
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SoftBank Group Corp. hit a record high, a vote of confidence in Masayoshi Son’s ambitions to ramp up investments in AI and semiconductors.
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Trading house Trafigura Group Pte Ltd has bought a gas-fired power plant in the US, part of a growing wave of merchants piling into supplying volatile electricity markets.
Key events this week:
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UK general election, Thursday
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US Independence Day holiday, Thursday
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Eurozone retail sales, Friday
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US jobs report, Friday
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Fed’s John Williams speaks, Friday
Some of the main moves in markets:
Stocks
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The S&P 500 was little changed as of 9:30 a.m. New York time
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The Nasdaq 100 was little changed
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The Dow Jones Industrial Average rose 0.1%
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The Stoxx Europe 600 rose 0.7%
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The MSCI World Index rose 0.2%
Currencies
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The Bloomberg Dollar Spot Index fell 0.2%
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The euro rose 0.4% to $1.0784
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The British pound rose 0.4% to $1.2736
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The Japanese yen fell 0.1% to 161.64 per dollar
Cryptocurrencies
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Bitcoin fell 2.6% to $60,298.55
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Ether fell 3.3% to $3,303.6
Bonds
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The yield on 10-year Treasuries declined three basis points to 4.40%
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Germany’s 10-year yield was little changed at 2.61%
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Britain’s 10-year yield declined five basis points to 4.20%
Commodities
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West Texas Intermediate crude rose 0.2% to $82.94 a barrel
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Spot gold rose 0.9% to $2,350.41 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from John Viljoen, Sujata Rao and Winnie Hsu.
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