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Dollar, US Treasuries advance on strong labor report

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NEW YORK – The dollar and benchmark Treasury note yield edged up in light trading on Friday after data showing a surge in hiring of Americans in March indicated a US economic recovery that is expected to be the most strong for decades.

Stock markets have been closed for Good Friday in the Americas, Europe and elsewhere, but it’s not a U.S. government holiday and the Department of Labor has released the closely watched Non-Farm Payrolls report.

The US economy created 916,000 jobs in March, more than economists’ forecast of 647,000, and the unemployment rate fell to 6.0 percent from 6.2 percent the month before. The jobs figures for February have been revised up according to the jobs report.

Futures on the S&P 500 stock index extended the gains to 0.43% after the report.

Despite the strong numbers, the data will not change the Federal Reserve’s stance on monetary policy, said Steven Ricchiuto, chief US economist at Mizuho Securities USA in New York.

“The economy is rebounding, but it’s not producing the things that will change the direction of monetary policy,” Ricchiuto said. “We’re going to test the 1.77 percent level (in the 10-year Treasury bill), but I’m not sure it’s going to break through (through) on that number.”

The 10-year US Treasury note rose 3.5 basis points to 1.7143 percent, but the rise was still below the 14-month high of 1.776 reached on Tuesday.

Treasury yields have skyrocketed on the economic outlook, boosted by US President Joe Biden’s plans for US $ 2.3 trillion in infrastructure spending and the acceleration of the rollout of COVID-19 vaccines.

The March Labor Market Report is the first of what is expected to be several very strong jobs reports over the next few months, said Russell Price, chief economist at Ameriprise Financial Services Inc in Troy, Michigan.

“The outlook looks very good,” Price said. But “in my mind, the biggest constraint might be the economy’s supply capacity to meet consumers’ wishes.”

Asian markets rose overnight as optimism over a global economic recovery lifted stock markets in Japan, China and South Korea.

The Nikkei in Tokyo hit a two-week high, with semiconductor-related stocks leading the market as the industry seeks to boost manufacturing amid a global chip shortage.

Biden’s spending plan includes US $ 50 billion for chipmaking and other technological research, said Fumio Matsumoto, chief strategist at Okasan Securities.

Chinese stocks posted a second weekly gain as recent data pointed to a strong recovery in the world’s second-largest economy. The CSI300 Index and the Shanghai Composite Index closed at nearly four-week highs.

Prices for Chinese steel rebar and hot-rolled coil hit record highs after China on Thursday announced a nationwide inquiry into steel capacity cuts launched in 2016 as part of efforts to ensure a drop in production this year.

South Korean stocks closed higher to post their biggest weekly gain in nearly two months as optimism that a stimulus-fueled economic recovery lifted stocks.

Shares rose on Wall Street on Thursday, with the S&P 500 index hitting a new high passing the 4,000 mark, and the benchmark Deutsche Boerse DAX in Germany setting a new high. Stocks rose on the strongest manufacturing data reports in decades across the globe.

The dollar gained for the third week in a row. The strength of the labor market should prove positive for the dollar, said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

The dollar’s rise to multi-month highs is expected to continue as more investors bet on the economic recovery.

The dollar index rose 0.122 percent, with the euro falling 0.13 percent to US $ 1.176. The Japanese yen weakened 0.09% against the greenback to 110.68 per dollar.

Spot gold prices fell 0.08 percent to US $ 1,728.84 an ounce.

(Reporting by Herbert Lash, additional reporting by Gertrude Chavez-Dreyfuss in New York; Editing by Chizu Nomiyama)

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