Markets today: Stock futures steady in nervy wait for U.S. payrolls

U.S. equity futures were steady Friday as traders awaited a pivotal U.S. jobs report for more evidence of whether the labour market is cooling fast enough for the U.S. Federal Reserve to cut interest rates. Bonds slipped.

Contracts for both the S&P 500 and the Nasdaq 100 indexes were little changed after enthusiasm about artificial intelligence and Big Tech prospects lifted the two benchmarks by 0.8 per cent and 1.5 per cent, respectively, on Thursday. Treasuries wavered before the jobs report, with the 10-year yield rising back to 4.18 per cent, after falling from 4.25 per cent at the start of the week. 

Friday’s nonfarm payroll report is crucial for traders evaluating whether bets on dramatic Fed policy easing next year are justified — or have gone too far. Buoyed by signs that inflation and wage growth are cooling, traders have ignited bets that cuts of at least 1.25 percentage points are in store over the next 12 months. That’s more than twice as much as Fed officials themselves, who while signaling they’re likely done raising rates have also been quick to caution that any talk of cuts is premature for now. 

“There is a more sanguine view on 2024, the feeling that the battle against inflation has been won and interest rates will come down. The question now is how quickly,” said Jerry Thomas, global CIO for equities at Sarasin & Partners, “We have interest rates that are quite high relative to where people think inflation will go, which means all eyes are on the jobs data.”