BLBG: Stocks, S&P 500 Futures Fall as Treasuries Rise After Payrolls
Treasuries climb with yen as Fed concern drives haven demand
Payrolls rise in August as unemployment rate declines
European stocks and U.S. equity-index futures declined while Treasuries rose as investors weighed prospects for higher interest rates after U.S. jobs data showed slower jobs growth and a drop in unemployment.
The gain in payrolls, while less than forecast, followed advances in July and June that were stronger than previously reported, the Labor Department said Friday. The unemployment rate is the lowest since April 2008. Average hourly earnings climbed more than forecast and workers put in a longer workweek, the report also showed.
Standard & Poor’s 500 Index futures fell 1 percent at 8:41 a.m. in New York. The yield on 10-year Treasuries dropped two basis points to 2.15 percent. Stoxx Europe 600 Index dropped 1.7 percent.
“Markets are very nervous about the prospects for the world economy and what a Fed rate hike will mean in this context,” said William Hobbs, head of investment strategy at Barclays Plc’s wealth-management unit in London. “Will the U.S. help paper over some of the cracks we’re getting from emerging markets? The U.S. still sets the beat, but it’s incapable of feeding global growth on its own.”
Concern a slowdown in China was damping the outlook for global growth roiled markets worldwide in the past month, sending global stocks to their biggest monthly loss in three years and commodities to a 16-year low. While investors have pared bets on a September liftoff to 26 percent amid the turmoil, that increases the risk of a exaggerated reaction should the jobs data give the Fed a green light to raise rates.
Federal Reserve Bank of Richmond President Jeffrey Lacker said it’s time to end the era of record-low interest rates. Lacker, who’s historically been more inclined toward tighter policy than most of his colleagues, said Friday before the payrolls report that labor-market slack has been reduced to pre-recession levels.
The European Central Bank downgraded its growth forecasts for the euro area on Thursday, with President Mario Draghi citing a slowdown in emerging-market economies and signaling policy makers may expand stimulus. A report on Friday showed German factory orders tumbled more than analysts anticipated in July and June’s reading was revised lower.
