(Bloomberg) — Stocks slumped while the retreat in Treasuries get fresh legs as investors digested an unexpected rise in job openings in August.
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The S&P 500 and Nasdaq 100 indexes fell more than 1% after Tuesday data showing the number of available positions rose to 9.61 million from less than 9 million in July, according to the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey, or JOLTS. The hotter-than-expected number drove swaps traders to increase wagers on the Federal Reserve raising rates in December.
The US 30-year yield traded near the highest level since 2007, and 10-year rates reached above 4.75%, reigniting calls for the rate on the benchmark bond to hit 5%. West Texas Intermediate crude wavered, tested $89 a barrel while the dollar index reached a 10-month high.
“The strength of the headline is impressive and certainly bodes well for the ongoing strength in the US labor market,“ Ian Lyngen, head of US rates strategy at BMO Capital Markets, wrote. While the data are from August, “investors are nonetheless interpreting this as yet further confirmation that the US economy can withstand higher real borrowing costs.”
Among the day’s biggest equity movers, HP Inc. gained after Bank of America analysts raised their rating on the PC maker to buy while McCormick & Co. slid after sales missed estimates hurt by a slow economic recovery in China.
Wall Street strategists are warning about the impact that elevated interest rates on equities, with Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co. saying there’s a risk of further stock-market declines. Currently, traders are pricing roughly a one-in-three chance of a rate hike in November.
Read More: Treasury Selloff Fuels Speculation That Bond Vigilantes Are Back
This week’s Treasury selloff came after US lawmakers managed to avert a government shutdown, prompting traders to increase bets that the Federal Reserve will raise rates in November. Atlanta Fed President Raphael Bostic beat the “higher-for-longer” drum Tuesday saying the central bank needed to keep rates elevated “for a long time.”
Comments from other Fed policymakers were even more hawkish, with Cleveland Fed president Loretta Mester saying on Monday that one more rate hike was likely needed and Governor Michelle Bowman urging multiple increases.
Key events this week:
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China has week-long holiday
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New Zealand rate decision, Wednesday
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Eurozone services and composite PMIs, Wednesday
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ECB President Christine Lagarde gives welcome address at conference, Wednesday
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US ISM services index, Wednesday
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France industrial production, Thursday
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BOE Deputy Governor Ben Broadbent, Riksbank First Deputy Governor Anna Breman participate at panel discussion, Thursday
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US trade, initial jobless claims, Thursday
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San Francisco Fed President Mary Daly speaks at the Economic Club of New York, Thursday
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Germany factory orders, Friday
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US unemployment rate, nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
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The S&P 500 fell 1.1% as of 10:24 a.m. New York time
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The Nasdaq 100 fell 1.4%
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The Dow Jones Industrial Average fell 0.9%
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The Stoxx Europe 600 fell 1.1%
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The MSCI World index fell 1.2%
Currencies
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The Bloomberg Dollar Spot Index rose 0.1%
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The euro was little changed at $1.0472
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The British pound was little changed at $1.2080
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The Japanese yen rose 0.6% to 149.03 per dollar
Cryptocurrencies
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Bitcoin fell 1.6% to $27,394.05
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Ether fell 0.7% to $1,653.63
Bonds
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The yield on 10-year Treasuries advanced seven basis points to 4.75%
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Germany’s 10-year yield advanced two basis points to 2.94%
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Britain’s 10-year yield was little changed at 4.56%
Commodities
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West Texas Intermediate crude was little changed
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Gold futures fell 0.3% to $1,841 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Julien Ponthus, Jason Scott and Tassia Sipahutar.
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