The U.S. labor market significantly outperformed expectations in August, adding 162,000 non-farm payrolls, vastly exceeding the anticipated 56,000 and the upwardly revised July figure of 21,000. This robust job growth, coupled with a steady unemployment rate of 4.1%, has led markets to ramp up their expectations for a Federal Reserve rate hike. BlackRock's Jeffrey Rosenberg emphasized that the jobs report is more indicative of inflation and Fed monetary policy, with some analysts, like Sahm, suggesting it favors a rate hike, while others believe inflation data, not just jobs, will dictate the Fed's next move.
This strong jobs data immediately impacted global markets. Wall Street futures traded below the flatline, while major European and Asian benchmarks saw mixed results. The dollar index jumped over 0.25%, and U.S. ten-year sovereign bond yields hardened. Conversely, crude oil prices fell by close to 1%, and gold plunged more than 2% as the renewed Fed hike bets took hold. Cryptocurrencies also tumbled, with Bitcoin dropping almost 3% to $79,197, after briefly surpassing $80,000 earlier, although they remained above the flatline.
Specific market movements included the DJIA down 0.32% at 53,513.20, the S&P 500 down 0.22% at 7,730.90, and the U.K.'s FTSE 100 down 0.28%. In currencies, EUR/USD was down 0.22% at 1.1600, and USD/JPY was up 0.10% at 155.99. U.S. 10-year government bond yields rose by 0.46% to 4.784%. Gold futures for December delivery dropped 2.32% to $4,434.50, and Brent oil futures for November were down 1.02% at $94.55. Despite the overall market reaction, some Asian indexes like Japan's Nikkei 225 and Hong Kong's Hang Seng saw gains of 1.26% and 1.74%, respectively.
