Zero Hedge
October 5, 2018
Traders were greeted with another sea of red from overnight equity markets, and even as Thursday’s vicious rout slowed ahead of today’s all important jobs report, Asian tech stocks were hammered following Bloomberg’s report that Beijing had hacked American computer networks using a microchip built by its spies.
“Stocks are firmly in the red as investors are worried about rising U.S. government bond yields, emerging-market economies, and Italy’s political situation,” said David Madden, market analyst at CMC Markets. To that he can also now add the tech rout amid Asian stocks following yesterday’s Bloomberg spying report.
Markets remain on edge about the sharp jump in US and global interest rates, although after the surge earlier this week US 10Y Treasury yields have remained relatively flat for the second consecutive day. Benchmark U.S. Treasury yields were at a seven-year top and on their way to their biggest weekly yield rise since February while European yields were adding to their biggest rise in months as well.
And with talk of plenty more U.S. interest rate hikes growing louder, it put all the more focus on the U.S. jobs data later. Eaton Vance portfolio manager Justin Bourgette said though there was too much hype around the payrolls figures, whichever way you approach it, the U.S. labor market is currently super strong. The latest Bloomberg consensus sees 185,000 new jobs and average hourly earnings increasing 0.3 percent in September after leaping 0.4 percent in August.
“Whatever the Fed’s concept of the neutral interest rate is, it must be rising,” Bourgette said. “And it is going to be trial and error to some degree (on how high rates go), because you just don’t know where the choking point is.”
Looking at today’s jobs report, DB’s Jim Reid said it best:
Given the rout in markets that started with Treasuries on…