Fra London Capital Group:
8:00. US equity futures kicked off the week on a negative note on fears that this week’s high-level trade talks between the US and China wouldn’t lead to a satisfactory outcome, after Chinese officials announced having narrowed the range of topics that they are willing to discuss on.
Discussions, which will begin on Thursday, will likely keep investors on their nerves and limit the risk appetite.
Mixed US jobs data, on the other hand, spurred the expectations that the Federal Reserve (Fed) could lower its rates by another 25 basis points by the end of this month.
The US economy added 136’000 new nonfarm jobs in September, versus 145’000 penciled in by analysts. The average earnings stalled. Although last month’s figure was revised up to 168’000 from 130’000 and the unemployment rate fell to 3.5%, a fresh fifty-year low, investors remain skeptical about the health of the US jobs market, with thousands of job cuts expected in the coming months from big names such as HP.
But Kansas City Fed President Esther George, who is among the most hawkish Fed members, said there is no need to cut the rates further, as the US economy is doing well and missing the 2% inflation target over the past decade hasn’t been a concern.
Still, treasury yields tanked, and the yield curved steepened, as the probability of a 25-basis-point cut jumped past 80%. The US 10-year yield fell to 1.50% for the first time in a month
