US Stocks Mixed to Start the Week – Dow Up 0.8%
US stocks had a mixed trading day yesterday as investors continued to react to last week’s significant payrolls results. The Dow regained some of Friday’s losses, closing up 0.86%, while the S&P finished nearly flat, down 0.05% on the day, and the Nasdaq dropped 0.38%.
The dollar and US Treasury yields pushed higher again, with the greenback hitting a new two-year high. The DXY closed at 109.89, while benchmark 10-year yields climbed to levels not seen since November 2023, gaining 2.7 basis points to close at 4.786%. The two-year yield also increased, adding 1.9 basis points to reach 4.398%.
Oil prices surged to levels not seen since August as US sanctions against Russia fueled supply concerns. Brent crude added 1.58%, rising to $81.02, while WTI jumped nearly 3%, closing at $78.86. Gold retreated into recent ranges as rising US yields weighed on the precious metal, dropping 1.06% to close at $2,660.99.
US Treasury Yields Drive Higher Again
U.S. Treasury 10-year yields surged to 14-month highs on Monday, driven by Friday’s strong payrolls results, which heightened inflation concerns. Traders are now anticipating a pause in the Federal Reserve’s easing cycle much sooner than expected, certainly earlier than many investors had hoped.
The benchmark 10-year yields rose as high as 4.799% during trading before settling at 4.789% by the close. The market now prices in a near-zero chance of a rate cut at the Fed’s next meeting, with just a 20% chance of easing in March and a 30% chance in May—a significant pullback from expectations just weeks ago.
Concerns are growing as recent data suggests a resilient US economy. These fears could be further solidified with strong inflation data expected this week. Investors will also look to the newly formed government in the coming weeks for clarity on their policy plans, particularly regarding any potential relief from anticipated inflationary measures following the Republican victory in November.
US Data Back in Focus Today
Asian markets are expected to start their trading day mixed after another active session on Wall Street, where investors continued to digest Friday’s US employment data.
The macroeconomic event calendar is light for the first two trading sessions of the week, but attention will turn to key data once New York trading begins. The first significant US inflation data of the year—the Producer Price Index (PPI)—is scheduled for release early in the session. Expectations are for the headline number to show a 0.4% month-on-month increase, with Core PPI expected to print a 0.2% month-on-month gain.
Stronger-than-expected results would likely reinforce current trends, pushing hopes for Fed rate cuts further into the future. Conversely, weaker results could offer investors a glimmer of hope. However, most traders view the PPI as merely a prelude to tomorrow’s Consumer Price Index (CPI) release, considered the more critical economic indicator.
