US 10-year yield surpasses 4% amid Fed rate path reassessment
Strong US jobs growth dampens recession worries
10-yr yield tops 4% for first time since early August
Dollar eases after hitting seven-week high versus yen
Updated at 10:28 a.m. ET/ 1428 GMT
By Chuck Mikolajczak
NEW YORK, Oct 7 (Reuters) -A gauge of global stocks was little changed on Monday and U.S. Treasury yields climbed, with the benchmark 10-year note topping 4% as investors reassessed the path of interest rates from the Federal Reserve.
The U.S. 10-year note climbed to 4.03%, its highest since Aug. 1 and first time above 4% since Aug. 8 after Friday's stronger-than-expected U.S. payrolls report fueled expectations the Fed will dial back its aggressiveness in cutting interest rates.
On Wall Street, stocks were modestly lower, although 9 of the 11 major S&P sectors were in negative territory. Energy .SPNY shares rose as crude prices continue to ascend on concerns a widening conflict in the Middle East could dent supply.
"(The) concerns that would keep people on the sidelines have to do with higher energy prices in the near term, (the) impact of that inflation and that yields which have been falling precipitously (have) now firmed up," said Art Hogan, chief market strategist at B Riley Wealth in New York.
The Dow Jones Industrial Average .DJI fell 134.09 points, or 0.32%, to 42,218.66, the S&P 500 .SPX fell 17.09 points, or 0.30%, to 5,733.98 and the Nasdaq Composite .IXIC fell 57.61 points, or 0.32%, to 18,080.24.
MSCI's gauge of stocks across the globe .MIWD00000PUS rose 0.01 points, or 0.00%, to 847.41. In Europe, the STOXX 600 .STOXX index rose 0.14%, erasing earlier declines.
Expectations for a Fed rate cut of 25 basis points (bps) at the central bank's November meeting stand at 88.2%, with the market pricing in an 11.8% chance it will hold rates steady, according to CME's FedWatch Tool.
Markets were completely pricing in a cut of at least 25 basis points just a week ago, with a 34.7% chance for another outsized 59 basis-point cut.
The yield on benchmark U.S. 10-year notes US10YT=RR was last up 4.5 basis points to 4.026%. The 2-year note US2YT=RR yield, which typically moves in step with interest rate expectations, rose 6.7 basis points to 3.999% after rising to 4.027%, its highest since Aug. 20.
A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes US2US10=RR, seen as an indicator of economic expectations, was at a positive 2.5 basis points after briefly inverting for the first time since Sept. 18.
Major U.S. economic data is not scheduled to be released until Thursday, when the consumer price index is issued. Fed Chair Jerome Powell and other Fed officials have commented recently that the central bank has shifted its focus from combating high inflation to labor market stability.
Several Fed officials are scheduled to speak this week, including Governor Michelle Bowman and Bank of Atlanta President Raphael Bostic on Monday.
Hezbollah rockets early on Monday hit Haifa, the third-largest city in Israel, which looked poised to expand its ground incursions into southern Lebanon on the first anniversary of the Gaza war.
U.S. crude CLc1 rose 1.82% to $75.73 a barrel and Brent LCOc1 rose to $79.33 per barrel, up 1.64% on the day.
The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.05% to 102.48, with the euro EUR= down 0.01% at $1.0975.
Against the Japanese yen JPY=, the dollar weakened 0.38% to 148.14 after hitting a seven-week high of 149.13. Sterling GBP= weakened 0.3% to $1.3076.
The Bank of Japan said broadening wage hikes were underpinning consumption and prodding more firms in regional areas to pass on rising labor costs, signaling the economy was making progress towards meeting the prerequisite for more interest rate hikes.
To read Reuters Markets and Finance news, click on: https://www.reuters.com/finance/markets For the state of play of Asian stock markets please click on: 0#.INDEXA
World FX rates YTD http://tmsnrt.rs/2egbfVh
Reporting by Chuck Mikolajczak; Additional reporting by Lisa Mattackal and Pranav Kashyap in Bengaluru; Editing by Hugh Lawson
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