Treasuries rallied, the dollar and U.S. equities slumped on Friday in response to a weaker-than-expected U.S. jobs data which fueled speculations the Federal Reserve will delay interest rate plans. The yield on the benchmark 10-year Treasury note slid 12 basis points (bps) to 1.92 percent, falling below 2 percent for the first time since August. The S&P 500 index tumbled 1.2 percent in morning trade, snapping a three-day gain. The dollar also fell sharply versus all its major counterparts, down 0.9 percent against the euro and 0.6 percent against the yen.
Oil prices traded lower on Friday, reversing earlier gains after weak U.S. jobs data which hinted at the potential for weaker energy demand. The downward move, however, was somewhat limited due to weakness in the dollar. Brent, the global benchmark, fell 1 percent (or 51 cents) to $47.87 a barrel, while West Texas Intermediate (WTI), the U.S. benchmark, lost 1 percent (or 50 cents) to $44.28 a barrel.
High Income Economies
U.S. job creation slowed sharply in September, with the economy creating only 142,000 jobs compared with 201,000 expected. In addition, the August figure was revised down from 173,000 to 136,000. Average hourly earnings were also flat. While the unemployment rate remains steady at 5.1 percent, these jobs market data cast doubt on the timing of the lift-off in policy interest rates signaled for this year.
The manufacturing Purchasing Managers Index for the U.K. dipped slightly to 51.5 in September, compared with 51.6 in August (Markit, sa). While the index remains in expansionary territory above 50, manufacturing is not contributing meaningfully to economic growth, and related exports are at a six year low.
Australian retail sales increased by 0.4 percent in August (m/m), despite the dramatic GDP growth slowdown in the second quarter associated with the end of the commodities boom and deceleration in China. Policy interest rate cuts, now at 2 percent, are helping support spending.
Latin America and the Caribbean
Brazil recorded a US$ 2.9 billion trade surplus in September, compared to a US$ 2.7 billion surplus in August, and a US$ 0.9 billion deficit a year earlier. It is the seventh straight monthly surplus and the highest since June, and above market expectations. Exports fell 17.7 percent (y/y) to US$ 16.2 billion, while imports shrank 35.8 percent to US$ 13.2 billion.
The managing director of Shell's joint venture in Nigeria said that the oil major would focus its future investments in the country on natural gas for domestic consumption and export. "Our strategy is to invest a lot more in gas, for domestic consumption and export. We want to grow our deep water and constrain our onshore oil production," Osagie Okunbor told reporters on Wednesday.
Zambian kwacha firmed on Wednesday after the central bank sold dollars in the market for the second day and President Edgar Lungu directed the Finance Ministry to increase fiscal interventions to stabilize the exchange rate. The kwacha plunged 17 percent on Monday to a record low due to the sharp slide in prices for its copper exports and a credit rating downgrade criticized by the government.