Global Stocks Rise, U.S. Treasury Yields Surge After Strong Jobs Report

Global stocks saw a rise on Friday, marking its sixth consecutive week of gains, while U.S. Treasury yields surged following a strong U.S. jobs report. The Labor Department's employment report revealed that nonfarm payrolls increased by 199,000 jobs in November, surpassing the 180,000 estimate of economists. The unemployment rate also fell to 3.7% from 3.9% in October. This unexpected surge in job growth has led to a modification in market expectations for the timing of rate cuts by the Federal Reserve.

The recent string of labor market data and reports indicating a cooling of inflation have led to increased expectations that the Federal Reserve may cut interest rates as soon as March. However, following the payrolls report, expectations for a March cut have slipped to about 46%, down from about 65% on Thursday. Additionally, U.S. consumer sentiment improved more than expected in December, signaling a positive outlook for households as inflation pressures ease.

On Wall Street, stocks closed higher with the S&P 500 reaching its highest level since March 2022, driven by a 1.1% gain in energy shares as oil prices bounced. U.S. Treasury yields also surged, with the benchmark U.S. 10-year Treasury note jumping 10 basis points to 4.23%, its biggest one-day gain since Nov. 9. European shares also closed at their highest since February 2022, with the STOXX 600 index up 0.80%. MSCI's gauge of stocks across the globe gained 0.29% and was poised for a sixth straight weekly gain, its longest streak in four years.

The recent economic data, along with comments from Fed officials, have fueled speculation about the timing of the central bank's pivot to a rate cut. The Fed's next policy meeting is on Dec. 12-13, while the next policy announcement from the European Central Bank (ECB) is on Dec. 14. Expectations have also grown that the ECB may be at or near the end of its rate hike cycle, with a potential cut on the horizon.

In the currency market, the dollar index gained 0.29% to 103.96, while the euro was down 0.29% on the day at $1.0761. Crude prices bounced after a recent slump, with U.S. crude settling up 2.73% at $71.23 per barrel and Brent settling at $75.84, up 2.42% on the day. Gold fell 1.27% to $2,002.56 an ounce after dropping to $1,994.49, its lowest since Nov 24, as the dollar and yields climbed following the payrolls report.

The U.S. dollar index was last up 0.3% at 104.0, on track for a modest weekly gain after a challenging November. The yen was 0.52% lower against the dollar at 144.35, following its biggest rally in almost a year the day before. The employment report suggested that financial market expectations of the U.S. Federal Reserve pivoting to cutting interest rates as soon as the first quarter of 2024 were premature, leading traders to pare bets on a March start to rate cuts.

In the cryptocurrency market, bitcoin rose 1.58% to 43,981, hovering near its highest since April 2022.