US stocks and government bonds sank and the dollar strengthened on Monday after last week’s blockbuster jobs report raised the likelihood of further interest rate increases.
Wall Street’s blue-chip S&P 500 closed 0.6 per cent lower and the tech-heavy Nasdaq Composite lost 1 per cent as the most recent non-farm payrolls report continued to dim sentiment.
Concerns that borrowing costs may still have further to rise were stirred on Monday after Raphael Bostic, president of the Fed’s Atlanta branch, said the January jobs report could lead to a higher peak in interest rates.
Bostic’s warning on Monday afternoon prompted a sell-off in US government bonds to pick up steam. The rate-sensitive two-year Treasury yield was up 0.19 percentage points to 4.49 per cent, while the yield on the benchmark 10-year Treasury rose 0.12 percentage point to 3.65 per cent.
US equities fell on Friday after the jobs report, but gained over the week as the Federal Reserve raised its main policy rate by only a quarter percentage point, the smallest amount since March.
