The global bond market has experienced a pause, with investors keenly awaiting the release of the US jobs report. This report is expected to have a significant impact on interest rates, with Wall Street keeping a close eye on signs of a slowing job market. Economists estimate that around 150,000 jobs were added in November, indicating a cooling labor market. However, some experts believe the number may be slightly underwhelming, suggesting that the labor market may be cooling more sharply than previously thought.
In the run-up to the jobs report, Japanese debt slumped, adding to concerns about yields dropping too far. This slump came after a weak auction and comments from the central bank governor, which have led traders to speculate that the Bank of Japan's policy meeting in December may be significant, as the central bank is inching closer to ending its negative interest rate regime. European bonds also fell, adding to the global bond market's pause.
Investors are now turning their attention to upcoming meetings of the Federal Reserve, European Central Bank, and Bank of England. Traders are currently betting on rate cuts by these major central banks next year. Benchmark 10-year Treasury yields and German rates have dropped significantly in recent weeks, indicating a strong run for global bonds.
The US labor market is being held back by high interest rates, which are affecting property investment and hiring in the manufacturing sector. Job cuts have increased compared to last year, and first-time claims for unemployment benefits have ticked up. Continuing claims have steadily risen in recent weeks, further indicating a potential slowdown in the labor market.
