GLOBEX trading was open until 8:15am for equity futures, and S&P 500 futures closed down -1.358% after employers in the U.S. added fewer jobs than forecast in March. The 120,000 increase in payrolls is the fewest in five months and followed a 240,000 revised gain in February; the median estimate from a Bloomberg News survey called for a 205,000 rise. Unemployment fell to 8.2% from 8.3%, the lowest since January 2009. Today’s data also showed Americans worked fewer hours and earned less per week on average. Faster employment growth that leads to bigger wage gains is necessary to propel consumer spending, which accounts for nearly 70% of the economy. The dollar is declining while Treasuries and gold rise; the 10yr Treasury yield has fallen -11.5bps to 2.065%.
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Sentiment is very negative this morning on diminished demand for Spanish debt and after FOMC minutes released yesterday showed the Fed had no plans of additional stimulus unless inflation falls below 2% or if the economy looses momentum. U.S. equity futures are drastically lower with the S&P 500 down -0.8%, the 10yr Treasury yield declined -5.6bps to 2.243%, and the euro depreciated to a three-week low against the yen. Sovereign debt yields in Europe are higher on the day, led by Spain and Italy.
FOMC Minutes: Holding Off on More Easing
According to the minutes of the Fed’s March 13 meeting released yesterday, there is a decreasing sense of urgency for adding monetary stimulus. “A couple of members indicated that the initiation of additional stimulus could become necessary if the economy lost momentum or if inflation seemed likely to remain below” 2 percent, according to the minutes. Stocks extended losses and the dollar rallied while Gold and oil tumbled after the release; the S&P 500 was down -0.9% after closing Monday at the highest level since 2008. The yield on 10yr Treasuries advanced +8bps to 2.27%, the largest upside move since March 14.
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Sentiment is mixed on the morning with Treasury yields modestly higher while the dollar declines against its major peers after China reported an expansionary PMI. Globally, bond yields are mainly higher with the exception of Irish, Italian, and Spanish bonds. In Europe stocks are lower and U.S. equity futures are coming in mixed with the S&P 500 down -0.077%. Commodities are mixed in early morning trading. The FX market is in “risk-on” mode, with higher yielding currencies outperforming on the day.
Global Bond Sales Break Record
Global bond sales have exceeded a record $1.16 trillion in Q1 2012 amid moves from central banks and reduced risk from the Euro-Debt Crisis. The previous record of $1.155 trillion was set during the Q1 2009, according to Bloomberg. Credit market confidence began improving after the successful restructuring of Greek bonds. As the Fed holds rates near zero, and after the ECB’s LTRO has supplied more than one trillion Euros of three-year loans to banks since December, debt issuance has ramped up. Corporate global bond yields fell to within 15bps of the lowest yield on record, to 4.12% on March 29, according to data from Bank of America Merrill Lynch.
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