LIVE MARKETS-US stock futures pressured, yields pop, after jobs data

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U.S. STOCK FUTURES PRESSURED, YIELDS POP, AFTER JOBS DATA

The main U.S. equity index futures are sharply negative after the release of the latest data on U.S. employment. E-mini S&P 500 futures EScv1 are now down around 1% vs a loss of around 0.2% just before the data came out.

The December nonfarm payroll headline jobs number came in at 256k vs a 160k estimate according to LSEG. The prior headline jobs read for November was revised down to 212k from 227k.

The December unemployment rate came in at 4.1% vs a 4.2% estimate.

Wage data, on a month-over-month basis was in-line with the estimate. On a year-over-year basis, it was cooler than expected:

According to the CME's FedWatch Tool, the probability that the Fed sits on its hands and leaves its current target rate of 4.25%-4.50% unchanged at its January 28-29 FOMC meeting is now around 97% from 93% just before the data was released. The chance that the FOMC cuts rates by 25 basis points is now around 3% vs 7%.

Looking out further into 2025, the market is showing a slight bias now for the Fed's next 25 basis point cut to occur in July, from June. Rates are then expected to flat-line into year end.

The U.S. 10-Year Treasury Yield US10YT=RR is now around 4.77%. It was around 4.70% just before the numbers came out. The yield ended Thursday at 4.681%.

Nearly all S&P 500 index .SPX sector SPDR ETFs are quoted down in premarket trade with tech XLK.P and real estate XLRE.P, both down nearly 1.5%, posting the biggest drops. With NYMEX crude futures CLc1 surging more than 4%, energy XLE.P, with a near 1.5% rise, is the sole gainer.

The SPDR S&P regional banking ETF KRE.P is losing nearly 2%.

Regarding the jobs data, Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin, said:

"The knee-jerk response to this payrolls report is to suggest the Fed doesn’t need to cut ever again. In fact, why not hike? But the details matter and the gains are still mostly in non-cyclical sectors."

Jacobsen added, "Wages aren’t contributing to inflationary pressures. The Fed can afford to wait to cut further, but unless inflation drifts higher there’s no need for the Fed to hike to tamp down inflation."

January U Mich preliminary sentiment is due at 1000 EST. The estimate is for 73.8 vs 74.0 last month.

Here is a premarket snapshot from around 0855 EST:

(Terence Gabriel, Chuck Mikolajczak)

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