Market developments
Equities: Stocks declined sharply, with the S&P 500 and Nasdaq dropping ~2% and 2.3% respectively, as traders adjusted their expectations for Federal Reserve rate cuts following strong jobs data and rising consumer inflation expectations. The TSX also ended the week ~1.2% lower, driven by weakness in the tech, health care and real estate sectors.
Fixed income: The unemployment rate fell unexpectedly, and the U.S. economy added the most jobs since March, leading to a selloff in Treasury bonds that pushed 30-year yields above 5%. Swap traders now anticipate about 30 basis points of Fed cuts this year, down from earlier expectations of 38 basis points.
Commodities: Copper prices are experiencing their largest weekly gain since September, driven by signs of increasing demand in China and the potential for new tariffs on U.S. imports of the metal proposed by Donald Trump. Despite a challenging last quarter where prices fell 11%, the current gains are attributed to renewed consumption signals from China, even during its typical winter slowdown.