Asian shares rise, government bonds rise after weak US jobs data

Treasuries rose across the curve as cash trading resumed after private sector data showed the U.S. job market cooling, raising expectations of a Federal Reserve rate cut.The 10-year yield fell four basis points to 4.08% after employment data from ADP Research showed U.S. companies shed an average of 11,250 jobs per week in the four weeks ended Oct. 25. Money markets also added to bets on Fed rate cuts, estimating a roughly 70% chance of a cut next month, according to swaps linked to policy meeting dates. Asian shares rose, with most companies rising but technology companies falling.

The federal government shutdown has increased the importance of private data as investors lacked key official indicators to gauge the strength of the U.S. economy. The record US shutdown could end as early as Wednesday after the Senate passed a temporary funding bill, boosting stocks as investors brace for a flood of delayed data once agencies reopen.“The biggest catalyst in the near term would be a government reopening, which would support GDP forecasts for the current quarter, but could also release more liquidity into the market, which is generally good for equities,” said the JPMorgan Market Intelligence team led by Andrew Tyler.

The figures showed that the labor market slowed in the second half of October, compared to earlier in the month. ADP’s latest monthly report, published last week, shows that private sector wage costs rose by 42,000 in October, after falling in the previous two months.

The data comes after a series of companies flagged plans to reduce workforces in recent weeks. From a report by outplacement company Challenger, Gray & Christmas Inc. found that employers had announced the most job cuts for October in more than two decades, fueling concerns about the health of the labor market. A Bloomberg poll of the dollar was flat early Wednesday after falling for five straight days. Gold traded above $4,100 an ounce. Earlier, the tech-heavy Nasdaq 100 closed lower, with Nvidia Corp. fell 3% after SoftBank Group Corp. said it had sold its entire stake in the chipmaker to help fund investments in artificial intelligence. SoftBank fell as much as 10% in Tokyo trading.

Meanwhile, the reopening of the government now depends on the House of Representatives, which plans to return to Washington to discuss the spending package. It would keep most of the government open until January 30 and some agencies until September 30.

If the bill is approved, it will go to President Donald Trump, who has already approved the legislation.

In 2013, the last shutdown to impact the jobs report, the government reopened on Oct. 17 and the September jobs report was released five days later, Deutsche Bank’s Jim Reid noted.

“So based on that timeline, we were able to get the September jobs report fairly quickly, not least because the original release was due on October 3, just a few days after the shutdown started,” he said. “The beginning of next week is realistic.”

The resumption of economic data releases could make the case for higher bets on Fed rate cuts. Most economists surveyed by Bloomberg suggest Fed officials will cut borrowing costs by a quarter point between Dec. 9 and December. 10 meeting. But the central bank’s path remains unclear after Chairman Jerome Powell said last month that a cut was not a certainty, a sentiment since shared by others at the Fed.