Global shares rose yesterday as wild volatility in bond and currency markets eased and oil prices fell, while weaker-than-forecast US jobs data scuppered chances of a rate hike from the Federal Reserve later this month.
Non-farm payrolls increased by 29,000 jobs last month after a downwardly revised 133,000 rise in August, the Labour Department’s closely watched employment report showed yesterday. Economists polled by Reuters had forecast payrolls advancing 90,000.
Bets on a second rate rise from the Federal Reserve this month faded after the data. Markets now assign a 15 per cent chance of a hike in October from around 25pc before the data.
Two top policymakers said this week they wanted more data before deciding what to do next with interest rates. Meanwhile, a move in December is still fully priced in.
Schroders senior economist George Brown said today’s figures may ease some concerns that previous interest rate cuts from the Fed could stoke inflation problems, but that it doesn’t alter the inflation backdrop.
“The Fed looks likely to unwind last year’s cuts,” Brown said.
“The bigger question is whether rates ultimately need to be taken into genuinely restrictive territory to bring inflation back under control.”
Wall Street futures extended gains after the data. Nasdaq futures were up 1.2pc and S&P 500 futures gained 0.8pc.
The benchmark 10-year Treasury yield fell 6 basis points to 5.1717pc, down from the 24-year high of 5.3445pc reached the day before.
The two-year yield, which is sensitive to changes in expectations for interest rate policy, fell 6.5 bps to 4.7204pc.
In Europe, longer-dated sovereign bond prices rose on the day, although those in more indebted countries, like France and Italy, lagged the gains in Germany, reflecting growing investor demand for protection against rising fiscal risks.
The German 10-year yield, the euro zone benchmark, was down 12 basis points, as investors preferred the relative safety of German bonds compared to their euro zone counterparts. Bond yields move inversely with prices.
Global bond markets have been under a sustained selloff in recent weeks as the US-Israeli war with Iran pushed up energy prices again, complicating the inflation outlook and further straining already stretched public finances.
But oil prices fell yesterday, providing some relief for stocks and bonds, as the energy market refocused on signs of recovering supplies from the Middle East and EU countries discussed a proposal to release additional diesel stockpiles.
US West Texas Intermediate crude futures fell 3.7pc to $89.43 a barrel. Brent crude futures were down 2.7pc to $99.45 a barrel, while European gasoil futures, a benchmark for diesel prices, fell about 5pc to $1,378 a metric tonne.
The US dollar index, which gauges the currency against six peers, fell 0.1pc to 101.86 after the US data, having rallied 0.6pc the day before to hit the highest level since April 2025. It was still set for a third straight week of gains, up about 0.8pc.
The rout in European bonds helped pin the euro lower and benefited the safe-haven yen and Swiss franc.
The euro was at $1.1248, having weakened 0.8pc on Thursday to hit the lowest level since May 2025.
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