Today was all about setting up for the Rosh Hashanah holiday. Oh, and waiting on the all-important jobs data in the morning. So I will keep this short and sweet. Nonfarm payrolls data will probably indicate an increase of 180,000 in August, compared with a gain of 162,000 for July, according to a separate Bloomberg survey (compared to 160k from Nomura).
Today started with 225k ESU and 1.1k SPU traded on Globex, trading range was 1656.50 – 1650.40. Wednesday’s regular trading hours (RTH) trading range was 1654.20 – 1635.50 before settling at 1653.40, up 14.3 handles. The U.K. 10yr YIELD CLIMBS ABOVE 3%; 1ST TIME SINCE JULY 2011. Roger_Volz U.S. 2.94% 10yr…Sensex +2.2%; HKHS +1.2%…GERMAN JULY EXPORT ORDERS DROP 4.5% FROM PREV MONTH…GERMAN JULY FACTORY ORDERS DROP 2.7% VS ESTIMATED 1% DECLINE… Challenger Job-Cut posted highest level since Feb ’13 Aug Challenger Job-Cut Report: 50,462 (+33.8% M/M) from 37,701 prior. NQ buyers below 3129 so far / August ADP Employment 176k vs 184k Expected / Initial Jobless Claims 323k vs 330k Expected – not too hot not too cold / Productivity and cost +2.3%.
Central banks: BOJ / Riksbank / BOE / ECB decisions were inline with expectations – unchanged. The ECB had the highest likelihood of making news given the press conference and Draghi’s tone. ECB DRAGHI: we wanted to make clear that we have a downward bias in interest rates for an extended period of time. VERY CAUTIOUS ABOUT RECOVERY, STILL ONLY FIRST SHOOTS and the central banks have not yet discussed coordinated action with the Fed. BOE is relying on forward guidance to keep rates low… Also, President Obama arrived at the G20 summit, greeted by Putin, who is still flexing…Putin says he will allow discussion of Syria during tonight’s working dinner at G-20 economic summit.
On the U.S. economic front, the ADP private sector adds 176,000 jobs in August:
… and jobless claims fall with the four week average at pre-recession level. U.S. labor costs were flat in the second quarter, a sign of minimal inflationary pressure, while productivity rose 2.3 percent during the period, which is a positive sign for the outlook for wages.
Today’s pit session opened one handle lower at 1652.50 – 1652.20, traded a low of 1651.70 before climbing up to 1658.00, 30 handles above last Wednesday’s open. The equities have closed positive 4 of the last 5 trading days…leaving some to chatter about what/how much is left in the tank? The 9:00 August ISM non-manufacturing data checked in at 58.6% vs exp of 55.0% and 56% prior. That was the fastest growth in almost 8 years. This data is inline with those calling for the tapering to be announced by the FOMC on 9/18. The equities continued to grind higher during the opening 18 minutes – even as the 10yr yield was trading ever closer to 3% plateau. The morning grind was at a much slower and quieter pace when compared to yesterday’s rocket shot. The Rosh Hashanah holiday played havoc on those traders that remained, sitting idling by waiting on the jobs data…most of the traders that remained followed Sen. John McCain’s lead – playing video poker as the S&P 500 traded sideways in the middle of the 6.3-handle morning trading range. This led to a chorus of – Don’t Diddle in the Middle!
The early look on the closing imbalance showed (14:12) MiM – MrTopStep Imbalance Meter showing 80%, $269M to the sell side. The SPU was trading 1653.50 area when the closing imbalance showed a small $111Mil to the sell side. The cash close traded 1653.10 before settling at 1653.00, down .40 handles on the day. donovan (03:04) not sure but with bonds toying with 3%, nfp better come in a little soft, or tomorrow could be red big. I don’t think asia is gonna wait to find out, i think they tank again tonite. iceChat (15:09) agree 1663 is the 50 dma 1658-1660 going to be hard to get past.
Roger_Volz (14:56) Turkish military deploys tanks, armored cars to reinforce units on Syrian border …this where crap can get out of control.
Carley Garner: We like to go big, or go home. Check out our latest gold and crude oil ideas on this week’s Mad Money with CNBC’s Jim Cramer http://bit.ly/1dUJIlu
The rates strategy team at RBS remain neutral on Tsys, saying “it’s too late to sell Treasuries and too soon to buy them.” The team says there are conflicting signals right now and they await more clarity. On the one hand, RBS says the following are supportive of Tsys: 1) A priced-in Fed tapering at the upcoming meeting; 2) Syrian conflict; 3) A “tired” stock market; 4) Expiry of the continuing budget resolution on 9/30; 5) Weekly momentum in 10s is oversold. On the other hand, RBS cites the following negatives: 1) Daily bear trendlines from May are still intact on 10s; 2) Govt bond mutual funds and ETF redemptions ongoing; 3) Could be decision on Bernanke replacement this month with a Summers pick.
Chatter – Syrian decision/vote may not be until 9/12 even following yesterday’s comment by the FRENCH PM: NO ACTION OVER SYRIA CHEMICAL WEAPONS USE WOULD SEND NEGATIVE MESSAGE OVER IRAN’S NUCLEAR PROGRAMME.