As traders analysed US data and raised their wagers that the Federal Reserve can hold off on further interest rate increases, the selloff in equities and Treasuries was temporarily halted on Wednesday.
Following a final run-up in the tech sector, equity indexes reached session highs in the closing minutes of trading, with the Nasdaq 100 climbing 1.4% and the S&P 500 rising 0.8%. The advancement of large-cap tech names, such as Microsoft and Amazon, was led by Tesla. The S&P 500 closed above a significant technical threshold.
After reaching a high of 4.88% during Asian trading hours, the rate on the benchmark ten-year Treasury note was lower the next day. Traders are now pricing a possibility of an increase in November of fewer than one in five, down from one in three previously.
Data showing US corporations added the fewest number of positions since the beginning of 2021 in September, indicating a decrease in labour demand across a number of industries, helped Wednesday's recovery. According to a different report, the services sector also slightly declined last month, reaching its lowest point of the year.
The better-than-expected US job statistics released on Tuesday and a spate of hawkish remarks from Federal Reserve officials had both contributed to the selloff's most recent leg. The 30-year yield reached 5% for the first time since 2007 as belief in the potential for future US interest rate increases from their present 22-year highs rose.
When Friday's payroll figures are released, volatility may return as markets look for indications that the economy is slowing and the Fed should back off from its higher-for-longer mantra.