The unexpected strength of the US economy, underscored by a surprising payrolls report, has shifted market expectations regarding Federal Reserve rate cuts. This robust labor market data has led to a rise in Treasury yields, negatively impacting bond prices and exerting pressure on equities. The S&P 500 Index fell as investors digested the implications of the strong economic data and rising yields, which have particularly affected interest-sensitive sectors. Despite these challenges, the US equity markets have shown some resilience, buoyed by the strong economic backdrop and potential future tax cuts. However, the depreciation of emerging market currencies continues as capital flows towards higher-yielding US assets.
The ProShares Short S&P500 ETF (SH) rose 1.56% to $42.86 at 16:20 on Friday, January 10.