Global stocks, bond prices climb after weak payrolls report

Fri Oct 2, 2015 4:20pm EDT
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By Chuck Mikolajczak

NEW YORK (Reuters) - Bond prices climbed on Friday after a weak U.S. employment report increased worry about slowing global growth, while global equities were able to rebound from an initial selloff to close with strong gains.

The economy created 142,000 jobs in September, well short of the 203,000 forecast, and August numbers were revised sharply lower to show only 136,000 jobs, the U.S. Labor Department said.

Bond prices jumped, with benchmark U.S. Treasury yields falling to their lowest level in slightly over 5 months. The 10-year U.S. Treasury note was last up 17/32 in price to yield 1.9824 percent.

U.S. stocks managed to rebound from sharp declines, buoyed by gains in the beaten down energy and materials sector.

"These numbers are weaker than expected, but not alarmingly weak," said Brad Lipsig, senior portfolio manager at UBS Wealth Management in New York.

"The risk is that they continue on a weakening trajectory. This could mean that weakness in overseas economies is now affecting the U.S. economy."

Years of cheap central bank cash after the 2007-2008 financial crisis have supported asset prices, but recent signs of a slowdown in global economic growth, and the Fed's decision last month to postpone raising interest rates, have unnerved investors betting on a return to more normal policy.

The weak jobs report likely pushes out the timeline for the Fed to raise interest rates for the first time in nearly a decade. Fed funds futures implied traders see nearly no chance the U.S. central bank would end its near-zero rate policy in October, according to CME Group's FedWatch program, with a hike likely to occur in March 2016.   Continued...

Traders work on the floor of the New York Stock Exchange September 23, 2015. REUTERS/Brendan McDermid