US stocks remained stable and Treasuries saw modest gains as market participants anticipated the release of Friday's payrolls report. This report is expected to influence the Federal Reserve's decision on whether to implement an interest-rate hike in September. S&P 500 futures were largely unchanged, while Lululemon Athletica Inc. experienced a significant drop in early trading after revising its full-year outlook. Conversely, chip-related and space sector stocks performed well. Longer-dated Treasuries gained, with the 10-year yield decreasing by one basis point to 4.75%. Brent crude eased towards $95 a barrel, and the dollar remained flat. Bitcoin, despite a slight dip, was on track for its third consecutive week of gains. Economists project an increase of 55,000 payrolls for August, following an unexpected decline in July, and the unemployment rate is expected to hold at 4.1%.
The August jobs report is particularly important given that the odds of a quarter-point Fed hike this month are roughly even. While Fed Chair Kevin Warsh has emphasized a focus on inflation, positive employment data could provide the Fed with more time to assess the effectiveness of current policy in controlling price pressures. According to Linh Tran at XS.com, the market needs a report that is weak enough to deter a Fed rate hike but not so weak as to raise recession concerns. Stronger-than-expected employment and wage growth, however, could lead to higher yields and negatively impact equities.
Conversely, figures that align with expectations and show moderating wage growth could create favorable conditions for the S&P 500 to retest its record high. International markets showed mixed performance; the Stoxx Europe 600 fell 0.1%, while the MSCI Asia Pacific Index rose 0.8% to its highest since June 22, 2026, and the MSCI Emerging Markets Index climbed 1.4%. In currencies, the Bloomberg Dollar Spot Index was little changed, the euro was steady at $1.1623, the Japanese yen fell 0.3% to 156.35 per dollar, and the offshore yuan rose 0.1% to a four-year high. Bitcoin fell 0.4% to $81,131.98, while Ether rose 0.6%. In the bond market, Germany's 10-year yield advanced one basis point to 3.36%, and Britain's 10-year yield also increased by one basis point to 5.15%. Brent crude fell 0.3% to $95.23 a barrel, and spot gold rose 0.1% to $4,478.44 an ounce.
