As we move into November, global stock indexes swung sharply as the U.S. dollar dropped to a six-week low and benchmark 10-year U.S. Treasury yields fell to five-week lows on Friday.
The catalyst was data showed U.S. job growth slowed more than expected in October with some seeing this as meaning the Federal Reserve may be done hiking interest rates. We will see.
The Fed, Bank of England, Canada and other Central Banks have all held rates, in recent times, while continuing to underscore the drive towards their inflation targets will mean rates stay higher for longer.
U.S. two-year yields were the lowest since early September after U.S. job growth slowed in part as strikes by the United Auto Workers union against Detroit’s “Big Three” carmakers depressed manufacturing payrolls. The data also showed the increase in annual wages was the smallest in nearly 2-1/2 years, pointing to an easing in labor market conditions.
The U.S. dollar index dropped to a six-week low after the jobs data. In afternoon trading, the dollar index fell 1%, with the euro up 1.04% to $1.0730.
“The good news here is that the slowdown will likely keep the Fed on the sidelines going forward,” said Brad McMillan, chief investment officer for Commonwealth Financial Network in Waltham, Massachusetts. “One of their key concerns has been an overheated economy, especially after last quarter’s GDP growth, and this suggests that problem is going away.”
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