Federal Reserve Vice Chairman Stanley Fischer talks on how the economy determines the pace of interest rate hikes. Hershey’s was the biggest per centage loser on the S&P 500.
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“If higher numbers come out (on the jobs report) and we get another strong reading, that could automatically boost odds of a September rate hike”, said Ninh Chung, head of portfolio management at SVB Asset Management in San Francisco.
A report from the US Commerce Department showed consumer spending, which accounts for more than two-thirds of US economic activity, rose for the fourth straight month in July.
Traders see a 21 percent chance of an interest rate increase when the Fed meets in September and a 54.2 percent chance in December, according CME Group’s FedWatch tool.
European shares responded unfavorably to the rising expectations for a 2016 Fed rate hike, with the pan-European STOXX 600 index last down 0.2 per cent. “Despite much previous excitement over the yen’s potential strength, it failed to convincingly crack the 100 yen (per dollar) mark”.
“We’re in a world where they seem to work”, Fischer said.
The Dow Jones industrial average was last up 103.58 points, or 0.56 per cent, at 18,498.98. The yield on Germany’s benchmark 10-year bond briefly rose more than 6 basis points to minus 0.025 percent – the highest level since June 24, when the result of Britain’s European Union referendum sent shockwaves through markets.
Iran also said late last week that it would only cooperate in upcoming producer talks in September if other exporters recognized Tehran’s right to regain market share lost during global sanctions that were lifted in January.
Treasury yields rose to their highest since June, dragging German Bund yields higher.
The yield on Italy’s 10-year BTP bond rose 1.5 basis points to 1.13 percent before its planned sale of up to 7.75 billion euros of three bonds later.
Asian shares traded mixed this morning and oil prices slipped despite warnings of a tropical storm system developing around the Central-Eastern and Eastern Gulf of Mexico, while the dollar-yen pair hit a one-month high on expectations the Federal Reserve is moving closer to raising interest rates.
“A much stronger USA dollar is causing selling pressure today”, said Carsten Fritsch of Commerzbank.
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Oversupply remained a major concern, with USA crude stockpiles forecast to have risen by 1.3 million barrels last week, a Reuters poll showed.
