# U.S. yield curve inverts after strong jobs data; world shares mixed
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-04-01
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Government Bond Yields Soar: What to Expect Next in Stock
Meta Description: Join us for an in-depth analysis of government bond yields climbing due to persistent inflation signals worldwide and the impact on global markets.
URL: https://financedigest.com/u-s-yield-curve-inverts-after-strong-jobs-data-world-shares-mixedhtml

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By Koh Gui Qing

NEW YORK (Reuters) – Government bond yields resumed their upward climb on Friday on signs of persistent prices pressures, as world shares whipsawed in choppy trade and oil prices braced for a 13% weekly fall following reserve releases.

U.S. [data released on Friday showed employers added 431,000 jobs](https://www.financedigest.com/stocks-mixed-dollar-gains-after-robust-inflation-jobs-data.html "Stocks mixed, dollar gains after robust inflation, jobs data") in March and the unemployment rate fell to 3.6%, continuing a strong run of hiring that has left key aspects of the American labor market “little different” from where they were before the COVID-19 pandemic.

With U.S. economic growth so robust and inflation running at three times the Federal Reserve’s 2% target, [investors are widely expecting](https://www.financedigest.com/wave-of-lawsuits-over-ftx-expected-but-investors-will-face-legal-hurdles.html "‘Wave’ of lawsuits over FTX expected, but investors will face legal hurdles") a drum roll of interest rate rises this year.

[Treasury yields](https://www.financedigest.com/wall-st-flutters-treasury-yields-ease-as-powell-resumes-testimony.html "Wall St flutters, Treasury yields ease as Powell resumes testimony"), which retreated earlier in the week as portfolio adjustments boosted demand for bonds, spiked again on Friday, causing a closely watched part of the yield curve to invert for the third time this week.

An inversion of the yield curve, when shorter-dated yields rise above longer-dated ones, is seen as a harbinger of a [recession in the next one or two years](https://www.financedigest.com/uk-to-avoid-recession-this-year-but-outlook-still-weak-bcc-says.html "UK to avoid recession this year but outlook still weak, BCC says").

Today’s solid growth of payrolls checked the box for the Fed in its drive toward fighting inflation,” said Rick Rieder, BlackRock’s chief investment [officer of global](https://www.financedigest.com/black-panther-sequel-ignites-box-office-with-330-million-global-debut.html "‘Black Panther’ sequel ignites box office with 0 million global debut") fixed income. Consequently, the [Fed looks clearly undeterred in reaching at least policy neutrality and probably will do at least one and maybe two 50-basis-point rate hikes](https://www.financedigest.com/asian-shares-gain-as-fears-about-rapid-fed-hikes-bank-crisis-fade.html "Asian shares gain as fears about rapid Fed hikes, bank crisis fade") by the June … meeting, which could even include an inter-meeting hike.”

Bets that aggressive monetary tightening could be in the cards did not [drag equity markets lower](https://www.financedigest.com/cyclicals-bat-drag-ftse-100-lower-ahead-of-fed-decision.html "Cyclicals, BAT drag FTSE 100 lower ahead of Fed decision") on Friday.

By mid-day in New York, the pan-European STOXX 600 index [climbed 0.54% and MSCI’s gauge of stocks](https://www.financedigest.com/stocks-climb-yields-fall-with-dollar-on-inflation-data.html "Stocks climb, yields fall with dollar on inflation data") across the globe fell 0.23%.

U.S. stocks dipped [across the board](https://www.financedigest.com/board-report-highlights-complex-decision-making-process-across-banking-and-finance-sector.html "Board Report Highlights Complex Decision-Making Process Across Banking and Finance sector"). The Dow Jones Industrial Average fell 0.24%, the S&P 500 eased 0.34% and the Nasdaq Composite dropped 0.42%.

Inflation in Europe is also running at record levels, with [euro zone inflation](https://www.financedigest.com/dollar-trims-gains-vs-euro-after-u-s-inflation-data.html "Dollar trims gains vs euro after U.S. inflation data") hitting 7.5% in March, data showed on Friday, another all-time high with months left before it is set to peak, raising pressure on the European Central Bank to act to contain prices even as growth slows sharply.

In response, the German 10-year government bond yield, a benchmark for the euro zone, rose 2.8 bps to 0.58%, after jumping 39 bps in March, its [biggest monthly rise since](https://www.financedigest.com/uk-firms-plan-biggest-pay-rises-since-2012-to-fill-staff-gaps.html "UK firms plan biggest pay rises since 2012 to fill staff gaps") 2009\. \[GVD/EUR\]

Government bond yields have moved up markedly in recent weeks and can be expected to trend higher over time due to inflationary pressures that are here to stay and responses by the main central banks,” Christian Nolting, [global chief investment officer at Deutsche Bank](https://www.financedigest.com/global-shares-jump-but-bank-whack-a-mole-not-over.html "Global shares jump but bank ‘whack-a-mole’ not over") Private Bank said in a note.

Two-year [Treasury yields](https://www.financedigest.com/wall-st-indexes-mixed-treasury-yields-tick-up-as-higher-rates-loom.html "Wall St indexes mixed, Treasury yields tick up as higher rates loom") jumped to 2.4259% from 2.284%, surpassing benchmark 10-year U.S. [Treasury yields](https://www.financedigest.com/stocks-fall-treasury-yields-rise-upon-final-2022-trading-day.html "Stocks fall, Treasury yields rise upon final 2022 trading day"), which also rose to 2.3694% from 2.325%. \[US/\]

In Tokyo, the Nikkei was down 0.56%, registering a 1.7% [weekly fall](https://www.financedigest.com/oil-prices-set-for-weekly-fall-on-stockpile-releases.html "Oil prices set for weekly fall on stockpile releases").

Supply disruption and surging raw material costs drove Japanese business confidence to a [nine-month low](https://www.financedigest.com/dollar-falls-to-nine-month-low-as-powell-notes-progress-in-disinflation.html "Dollar falls to nine-month low as Powell notes progress in disinflation") last quarter.

Chinese blue chips rose 1.27%, helped by [hopes for policy easing](https://www.financedigest.com/stocks-bonds-extend-rally-on-hopes-rate-hikes-ease.html "Stocks, bonds extend rally on hopes rate hikes ease"). \[.HK\]

Oil dipped in and out of negative territory ahead of a meeting of International Energy Agency member [nations set to discuss a release](https://www.financedigest.com/national-cinemedia-releases-first-cinema-attention-measurement-study-conducted-by-lumen-in-collaboration-with-dentsu.html "National CineMedia releases first cinema attention measurement study, conducted by Lumen in collaboration with dentsu") of emergency oil reserves alongside a huge planned release by the United States.

[Oil is on course for a 12%-13% weekly fall – the sharpest in almost two years – after an earlier surge driven by Russia’s invasion of Ukraine had seen prices rise](https://www.financedigest.com/oil-rises-about-2-with-u-s-and-china-inflation-in-focus.html "Oil rises about 2% with U.S. and China inflation in focus") by more than 30%. \[O/R\]

U.S. crude fell 1.23% to $99.05 per barrel and Brent was at $104.19, down 0.5% on the day

The [dollar has benefited from safe-haven flows and expectations of rising](https://www.financedigest.com/dollar-slips-after-upbeat-china-data-euro-pound-rise.html "Dollar slips after upbeat China data; euro, pound rise") U.S. rates. Against a basket of peers, the greenback was up 0.34% at 98.647, and it was up 0.7% against the yen at 122.57. \[FRX/\]

The euro was down slightly at $1.1039.

Safe-haven gold fell 0.76% after its [biggest quarterly gain in two years](https://www.financedigest.com/uk-nurses-begin-biggest-strike-ballot-in-more-than-100-years.html "UK nurses begin biggest strike ballot in more than 100 years"). Spot gold was last quoted at $1,923.50 per ounce. \[GOL/\]

(Additional reporting by Andrew Galbraith in Shanghai, Tom Westbrook in Singapore and Saikat Chatterjee in London; Editing by Simon Cameron-Moore, Will Dunham, Catherine Evans, Barbara Lewis and Nick Macfie)


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