In response to strong data on the US economy, traders reduced their expectations for interest rate cuts, which resulted in a decline in global bonds and only minor movements in stocks. 

The yield on the 10-year Treasury increased in proximity to the critical 4.5% level, which some investors consider a barrier to a rise toward the highs of the previous year.

Hectic Week For Investors

The most likely scenario is two reductions, as implied by interest-rate swaps, which indicate about 60 basis points of US monetary easing this year. The likelihood of a third cut remained more than 50% on Friday.

The start of first-quarter profits, US inflation statistics, and a decision on interest rates by the European Central Bank make this a busy week for investors.

For the sixth consecutive month, the US jobs data released on Friday beat estimates, supporting the Fed’s decision to take its time lowering interest rates. The US consumer pricing data on Wednesday, which is anticipated to provide more proof of a slowdown, will be the next crucial event for markets.

According to Madison Faller, global investment strategist at JPMorgan Private Bank, “there are indeed risks, and seeing the 10-year Treasury yield sustainably surpass 5% would indicate markets pricing in more likelihood of a hike” on Bloomberg Television.

Business Connected To Cryptocurrency

But investors should be able to handle this shift as long as they believe that a rate cut is the next step. Futures contracts for the S&P 500 and Nasdaq 100 remained stable after Wall Street closed strongly on Friday, helped by the most recent shocking data on the US labor market.

In US premarket trade, Tesla Inc. surged as much as 4.2%, aiming to partially reverse its 34% year-to-date decline. Tesla’s CEO, Elon Musk, announced in a post on X Friday that the company will reveal its new robotaxi on August 8.

As Bitcoin soared for a third session and crossed back above $71,000, shares of businesses connected to cryptocurrencies increased. Oil fell from a five-month peak following Israel’s announcement that it will withdraw some troops from Gaza.

Recent supply shocks and rising geopolitical tensions have caused crude to spike higher, clouding the inflation forecast and increasing the likelihood that the global benchmark Brent price will hit triple figures.

“At this point, we anticipate that the conflict will continue without having a major impact over the next few months, but the risk still exists.