A nagging problem went from bad to worse Friday as investors worldwide dumped emerging market assets on speculation that the US Federal Reserve will soon be forced to accelerate its rate hike schedule.
Signs first emerged in US bond markets as spiking yields in Treasuries prompted a new round of sell-offs. The yield on a 10-year Treasury peaked at 3.23% on Thursday – its highest level since 2010. The suddenness of the increases caught investors off-guard, with many looking to today’s US nonfarm payroll report for clues as to whether the US Fed will maintain its current course on interest rates.
The jobs report actually came in below expectations on total employment: 134,000 nonfarm jobs were created in September, below the consensus estimates of 185,000. However, the more consequential metric here is wage growth, and that came in just under expectations: a 2.8% year-over-year increase, short of the 3% that Wall Street had predicted.
US bond markets have thus far been indifferent on the job report, with the 10-year Treasury trading sideways at around 3.2%.
Emerging markets are another story entirely, and here’s a rundown of recent setbacks: