Eyes On US NFP Report, Bond Sell-Off Continues

October 04, 2023 22:44

While economists focus on the upcoming US Nonfarm Payrolls report due on Friday, another employment report coming from the US has triggered a bond sell-off in the markets. The JOLTS report published yesterday showed that August’s job openings were much more than anticipated, indicating an economy that has not cooled down despite the Federal Reserve’s (Fed) tight monetary policy.

Investors’ fears that the Fed would go higher for longer when it comes to interest rates forced them to sell government bonds. As a result, the yield on 30-year US Treasuries hit a 16-year high while the interest rate on 30-year UK government bonds hit 5% for the first time in the last 25 years.

US Nonfarm Payrolls September 2023

The US Nonfarm Payrolls data for September 2023 will be published by the Bureau of Labour Statistics (BLS) on Friday. Market analysts surveyed by Dow Jones expect that report to show an increase of 170,000. However, it should be noted that NFP figures sometimes tend to surprise economists as they are not in line with forecasts.

The US Labour Department published its monthly Job Openings and Labor Turnover Survey on Tuesday. The report said that job openings totalled 9.61 million in August, a jump of nearly 700,000 from July and well above the Dow Jones estimate of 8.8 million. The elevated was not expected as job openings had been declining in the last few months, showing the effect of the strict monetary policy implemented by the Fed.

RBNZ Keeps Interest Rates Unchanged

New Zealand’s central bank kept its borrowing costs on hold as economists expected. The post-meeting statement said that “the committee agreed that interest rates may need to remain at a restrictive level for a more sustained period of time. Inflation is still expected to decline to within the target band by the second half of 2024.”

The RBNZ’s governing board noted that “a prolonged period of subdued activity is required to reduce inflationary pressure. There is a near-term risk that activity and inflation do not slow as much as needed.” As a result of the RBNZ’s decision on interest rates, the New Zealand dollar fell to a 3-week low against the US dollar.

Has the Japanese Yen Received Support?

The Japanese Finance Minister Shunichi Suzuki declined to comment on whether Tokyo had stepped in to support the Japanese yen, adding that “we're ready to take necessary action against excess volatility, without ruling out any options.”

The Japanese yen slid against the US dollar to the lowest level recorded in a year before strengthening last night with market analysts suspecting that the finance ministry intervened to control the situation. The yen has lost 12% of its value in 2023.

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

Miltos Skemperis
Miltos Skemperis Financial Content Writer

Miltos Skemperis’ background is in journalism and business management. He has worked as a reporter on various TV news channels and newspapers. Miltos has been working as a financial content writer for the last seven years.