Investing.com – Top 5 things that rocked U.S. markets this week.
Strong US Jobs Data Send Bond Yields Soaring; Dow Plummets 660 points
The Labor Department said Friday, U.S. non-farm payrolls rose by 200,000 jobs in January. That beat economists’ forecasts for 184,000 new jobs.
Wage growth for the prior month was revised upward to 0.3%, triggering investor expectations that tighter labor markets could finally increase wage price pressures, spurring inflation growth, forcing the Fed to raise rates by more than markets currently priced in.
The United States 10-Year rose above 2.8% to four year highs as some market participants now expect the Federal Reserve to raise rates four times this year.
JPMorgan warned that if productivity does not improve then rising wages could hit corporate margins which could curb upside momentum.
The Dow Jones Industrial Average plunged more than 600 points on Friday.
WTI Crude Posts Weekly Loss as US Output Hit 10 Million Barrels Per Day
Crude oil prices settled lower for the week as recent data showed US output rose above 10 million dollars for the first time in nearly half a decade, while US supplies snapped 10 straight weeks of declines.
This renewed fears that rising output could dampen major oil producers’ production curbs, slowing down rebalancing in oil markets.
Goldman Sachs, however, allayed fears over rising production somewhat after the bank raised its forecasts for oil prices amid expectations for a “speedy rebalance in oil markets.”
On Friday U.S. crude futures fell 35 cents to $65.45 a barrel.
Federal Reserve Tweaked Its Monetary Policy Lyrics
As was widely expected, the Federal Reserve left interest rates unchanged within a 1.25% - 1.50% range. Investor focus, however, was drawn to a subtle shift in the central banks’ language concerning inflation.
The Fed said that inflation is expected to “move up,” which differed from its usual “remain low” inflation narrative.
This subtle shift in language together with the bullish jobs report helped the dollar recover some of its losses against major rivals like the euro and sterling.
Gold Fell To Rising Dollar, Bond Yield Pressure
Soaring bonds yields and a rising dollar pressured gold prices to its biggest weekly loss since December. The yellow metal fell to about $1,333 an ounce from its weekly high of about $1,352 an ounce.
Yet, some market participants said that it is too early to conclude the balance of power has shifted to the bears as gold is up roughly 9% over the past year, while recent CFTC COT data showed money managers continued to raise their bets on gold, increasing net long positions to near multi-year highs.
Crypto ‘Bloodbath’ Round 2: Bigger, Uglier, Scarier
There was no place hide for investors 'hodling' the top ranking cryptos as the global regulatory crackdown gripped markets ushering in wave of selling pressure as billions were wiped off the crypto-market.
The total cryptocurrency market cap at $413 billion, at the time of writing, is below $478 billion – the level last seen following the so-called crypto “bloodbath” on Jan. 16. Yet that is still well above the total marketcap of roughly $170 billion seen during the first major regulatory crackdown in September last year.
Bitcoin fell roughly 20% to $8,680 over the past week, while Ethereum, the second largest cryptocurrency by market cap, fell 14% to $898.11.
Ripple XRP, meanwhile, led the weekly decline falling nearly 30% to $0.87.