Friday November 6th


Futures mostly lower after strong jobs; 2-year yield tops 0.9%

U.S. stock index futures struggled for direction, holding mostly lower after the nonfarm payrolls report soundly beat expectations. The report showed the addition of 271,000 jobs, with a 5 percent unemployment rate. Average hourly earnings increased 9 cents. Dow futures gave up earlier gains to briefly fall more than 50 points, while bond yields climbed after the data release. The 2-year yield climbed above 0.9 percent and the 10-year yield traded near 2.3 percent. The euro fell below $1.08 and the yen weakened to 122.63 yen against the U.S. dollar. Economists polled by Reuters forecast about 180,000 new jobs were added in October, with unemployment holding near September's 5.1 percent rate. Analysts said generally any number above 150,000 would be positive for the economy, and support the case for a rate rise as soon as December. They will also watch the participation rate, revisions to prior months, and changes in hourly wages for signs of inflation and tightening in the labor market. Just one other monthly employment report is due before the Federal Reserve meets Dec.15 and 16. Other data released Friday includes the latest consumer credit figures for September at 3:00 p.m. Chicago Fed President Charles Evans said on CNBC that the report was "very good news" and that strong jobs growth would help push up inflation. Evans is a voting member of the Federal Open Market Committee. St. Louis Fed President James Bullard is also due to speak and Fed Gov. Lael Brainard speaks at an IMF conference after the closing bell. Earnings season is beginning to wind down, with just a few major companies reporting on Friday. Ameren, Brookfield Asset Management, Cigna and Tri Pointe Homes are among those posting results before market open, while numbers from Warren Buffett's Berkshire Hathaway will be closely watched after the bell. In Europe, equities traded lower Friday as global markets awaited the latest U.S. employment report. Share markets in China and Japan charged up to their highest levels since August 21 on Friday, while the rest of the region faltered ahead of the release of U.S. nonfarm payrolls report that could provide hints to when the Federal Reserve will start to push up interest rates. Nikkei gains 0.8%. Japan's Nikkei 225 index widened gains in the final hour of trading to settle at an 11-week peak, as a weaker yen buoyed sentiment. Crude prices gave up gains on Friday after the U.S. government reported employers added far more jobs in October than expected. The bullish report offers evidence of improving labor markets, which may increase the chance the Federal Reserve's policymaking committee raises interest rates at its December meeting. The U.S. dollar typically strengthens with higher interest rates, making imports of greenback-denominated crude for countries with other currencies more expensive. U.S. crude futures were trading down 20 cents at $45 a barrel at 8:39 a.m. EDT (1239 GMT). Brent crude was up 6 cents to $48.04 a barrel. Both spot gold and gold futures fell more than 1 percent immediately after the Bureau of Labor Statistics reported Friday that nonfarm payrolls grew 271,000 for the month, a sharp jump from weak August and September numbers. The headline unemployment rate declined to 5.0 percent. Spot gold was down 1.4 percent at $1,087.55 an ounce, while futures were down 1.5 percent an ounce at $1,086.90.