US stocks closed at record highs and the dollar hit a five year high, and shorter-dated Treasury bonds were yielding the highest since April 2011 after stronger than expected US job reports prompted people in the markets to bring forward expectations of when the interest rates might be increased by the Federal Reserve.
Chief global strategist for J.P. Morgan Funds, David Kelly said, “We continue to see this steady drip into the equities markets, and I don’t think it’s going to stop any time soon.”
According to ABC News, the Dow Jones Industrial average climbed 0.3% or 58.69 points to 17,958.79 while the S&P 500 Index rose 0.2% or 3.45 points to 2,075.37. The Nasdaq Composite Index gained 0.2% or 11.32 points to 4,780.76.
Jobs report for November and other positive economic data, might raise expectations among investors that the Fed might start raising your interest rates soon.
The yield on the benchmark 10-year US treasury note rose 2.31% Friday from 2.24% the day before with investors selling bonds in anticipation of higher rates.
Chief investment officer of fundamental fixed income at BlackRock wrote, “The bottom line is this was yet another very solid employment report and another strong data point reaffirming the strength of US growth versus a sluggish global economy.”
The Financial Times quoted strategist at Miller Tabak, Anthony Karydakis as having said, “Last month’s gain may well represent the first credible sign that the tightening labor markets are starting to generate some upwards pressure on wages.”
He added, ‘The odds of a Fed rate hike in the second quarter are increasing. At this point, we consider such a prospect as now approaching the 50% range versus our earlier expectation for the rate lift-off to take place in the second half of the year.”
The gains were not enough to push the Dow to a landmark and it is on the verge of 18,000.
To contact the reporter of the story: Jonathan Millet at email@example.com