And now you know why Fed Chairman Ben Bernanke didn’t taper…the whole theme is now about merging the 2 debates…if you can’t even get the government to open, how can you agree on that AND the debt ceiling? However unlikely, the probability of default is rising as we enter the third day of the partial shutdown and it would make sense that the market will eventually reflect it.
Cold truth of the matter… what’s curious is that people don’t see what happened yesterday. There were negative headlines and sound bites coming out of the meeting(s) (ie “cordial but unproductive”), but step back and you can see we made progress – we had everyone come together for their first meeting… We know how this song ends and we know the dance steps from last year’s cliff drama. Stay tuned – we are because with interviews like this from GOP Rep. Todd Rokita ‘You’re beautiful, but you have to be honest’ http://yhoo.it/1dXSfRi #votehimout
Today started with 205k ESZ and 500 SPZ traded on Globex, ESZ trading range was 1684.25 – 1673.50. Wednesday’s regular trading hours (RTH’s), SPZ pit session trading range was 1687.00 – 1673.50 before settling at 1683.10, down 6.3 handles. Initial claims checked in at 308k vs exp 313k. Barron’s reports: The 4-week average is at a new recovery low, at 305,000 for a fifth straight decline. The average is trending more than 20,000 below the month-ago comparison, which is a convincing signal of month-to-month improvement in labor conditions.
Today’s December S&P 500 (SPZ) pit session opened fractionally higher at 1683.50 – 1683.30 and traded 1684.00 before reversing down to a low of 1663.50 and back and filling up the mid-1670’s. This story in the Financial Times got the ball rolling downhill this morning: US Treasury and IMF warn of default ‘catastrophe’ – By James Politi and Robin Harding in Washington The US Treasury department and the International Monetary Fund warned that the failure by Congress to raise America’s borrowing limit posed a severe threat to the global economy and risked triggering a new recession and financial crisis. http://on.ft.com/18yuUDD
ISM non-mfg checked in at 54.4, big miss vs exp 57.4, helping to grease the slide to lowest level in almost a month. Bargain hunters were quite patient today and this headline helped set the stage: Republicans Say Boehner Has Offered Assurances on Default http://nyti.ms/1bAbCir
The SPZ was trading in the 1674 area at 2:00 in light volume. The early look on the closing imbalance showed (14:28) MiM – MrTopStep Imbalance Meter showing 86%, $730M to sell side. At 2:47 the SPZ was trading in the 1675 area when the imbalance showed a moderate $400M to sell. The cash close traded 1672 area before settling at 1669.70, down 13.4 handles.
Note: Labor Department will NOT release employment data tomorrow.