Written by Chuck Mikolajczak
NEW YORK (Reuters) – U.S. Treasury yields rose and U.S. index futures closed slightly higher after employment data for March indicated the labor market remained tight, but was broadly in line with market expectations.
The Labor Department said non-farm payrolls increased by 236,000 jobs last month, compared with the forecast of 239,000 economists polled by Reuters.
Data for February was revised upward to show that 326,000 jobs were added instead of the 311,000 previously reported. The unemployment rate fell to 3.5% from 3.6% in the previous month.
US stock index futures erased losses and turned higher after the report, while the dollar rose and US Treasury yields rose as expectations increased that the Federal Reserve will raise interest rates at its meeting in May.
“Obviously the headline number is basically exactly estimation. There’s really nothing here that wasn’t where there was a consensus,” said Alex Coffey, chief trading analyst at TD Ameritrade in Chicago.
“We kind of have that situation where it’s not game-changing, and it allows us to continue to the next data point and that lack of surprise is seen as optimistic.”
The US stock market is closed until Monday due to the Good Friday holiday. European markets are closed on Friday and Monday.
The MSCI measure of stocks around the world fell 0.01%. E-mini futures for the S&P 500 closed up 0.23% following the data.
In Asia, Japan’s Nikkei average rose on Friday, paring its weekly decline, as a weaker yen and an overnight Wall Street close boosted sentiment ahead of the jobs report.
The jobs report, however, heightened expectations that the Fed will raise interest rates at its next meeting, with the market pricing in a 69% chance of a 25 basis point rate hike, up from Thursday’s 49.2%, according to CME’s FedWatch tool.
“While the headline number of payroll remains high, hours are being cut with the index for total weekly hours falling two months in a row,” said Brian Jacobsen, chief investment analyst at Allspring Global Investments in Menomonie Falls, Wisconsin.
“The recruitment situation has gone from red hot to just smoky.”
The benchmark 10-year note rose 8.9 basis points to 3.379%, from 3.29% late Thursday.
The two-year US Treasury yield, which is usually in line with interest rate expectations, rose 15.3 basis points to 3.974%.
The dollar index rose 0.167%, with the euro slipping 0.13% to $1.0906.
(Reporting by Chuck Mikolajczak; Editing by Jan Harvey)