U.S. stock futures point to further losses after payrolls shocker

What’s driving markets

There continued to be shock over the 517,000 surge in nonfarm payrolls reported by the Labor Department on Friday.

“On the one hand, a resilient labor market could buttress households’ willingness and ability to continue consuming and therefore support corporate earnings and equities over the near term,” said Rouyaka Ibrahim, an analyst at BCA Research. But longer-term implications are more dire — if a second wave of inflation is triggered, the Fed would have to act more forcefully, perhaps leading to a deep recession, she said.

The yield on the 10-year Treasury
TMUBMUSD10Y,
3.614%
rose 7 basis points to 3.60%.

“January’s payrolls report wasn’t a gamechanger, it was a game-extender. Said differently, the Fed’s messaging regarding how far into restrictive territory policy needs to push and the duration of the stay at such levels is beginning to resonate with investors,” said rates strategists at BMO Capital Markets.

Federal Reserve Chair Jerome Powell will have the opportunity to react on Tuesday when he delivers a speech to the Economic Club of Washington.

Traders also were reacting to the political rift between the U.S. and China after President Joe Biden ordered a balloon to be shot down. China has said the balloon was to monitor the weather, not for spying, and had been blown off course. The Hang Seng dropped 2%.