Weekly US initial jobless claims landed at 197K, below the 200K forecast
US initial jobless claims totaled 197K last week versus a forecast 200K, with continuing claims at 1716K against a 1708K estimate.
Global bond yields retreat from highs, with focus shifting to US non-farm payrolls data due Friday.
Entering the latter part of the week, bond markets remain a focal point for traders. The standout development this period has been global bond yields climbing to multi-year peaks, with some reaching levels not seen in decades. For those who missed it: The tectonic shift that is taking place in the bond market
Movements in bond markets can influence other asset classes, and that dynamic has been playing out since overnight sessions. Following their recent highs, yields are now easing somewhat today, giving broader markets some relief.
The USD/JPY pair has dropped back to 157.70, partly due to intervention concerns, while gold has recovered modestly, gaining 1.1% to reach $4,433 on the day.
This backdrop sees the 10-year Treasury yield declining to 4.77%, off from a peak of 4.81% recorded yesterday. Meanwhile, Japan's 10-year government bond yield has also retreated to 2.95%, down from a high of 3.02% the previous day.
Weaker-than-expected US ADP employment data on Wednesday may have contributed to the shift, but traders and investors are now looking ahead to the main event. That is Friday's US non-farm payrolls report.
Although inflation is the primary concern, the Federal Reserve's dual mandate should not be overlooked. Any negative labour market reading could still rattle markets if it reduces the likelihood of the Fed raising interest rates this month.
Currently, the chances of a September rate hike are roughly a toss-up. Fed funds futures indicate about a 59% probability of a rate increase next month.
The key data release will be next week's US CPI figure. Until then, markets must trade on what is available, which for this week means Friday's US jobs numbers.
Beyond ongoing worries about higher energy costs and gradually increasing inflation expectations, that remains the primary risk event ahead of the weekend.
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US initial jobless claims totaled 197K last week versus a forecast 200K, with continuing claims at 1716K against a 1708K estimate.
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