Markets Rally Ahead of September Jobs Report After Week of Bond Market Turmoil

Wall Street futures rose and bond market volatility eased on Friday, October 2, as investors positioned ahead of the September nonfarm payrolls report, the most closely watched economic release after a week of sharp global bond selling. S&P 500 futures gained 0.5%, Dow Jones futures climbed 299 points or 0.6%, and Nasdaq-100 futures were up 0.7% ahead of the 8:30 a.m. ET release. The benchmark 10-year Treasury yield, which had surged to multiyear highs Thursday before pulling back, was little changed at 5.243% as traders waited for the data to set their next move.

Economists expected September payrolls to show roughly 84,000 to 90,000 new jobs added, with the unemployment rate holding steady at 4.1%, a moderation from August's surprisingly strong 162,000 gain. Analysts at Pantheon Macro said the report would offer only a brief respite from the bond selloff that dominated the week, given that the Federal Reserve has signaled its primary focus remains inflation rather than the labor market. Traders had already scaled back the probability of a Fed rate hike at the October meeting to around 37% following earlier inflation data, with December becoming the more likely window for the next move.

Risk assets broadly firmed in anticipation of the data. Gold edged higher as currency and bond market volatility subsided, and Bitcoin traded above $86,000. Oil prices also eased, adding to the more settled tone heading into the release.