Job Growth Still Tepid
Markets are lower this morning, giving back much of yesterday's gains. The big piece of economic data was the ADP Employment Report which showed the private sector added 166,000 jobs in September. This was below estimates for 180k jobs, and doesn't seem strong enough to renew talks about an imminent taper from the Fed.
The govt appears no closer to ending the shutdown as it enters its 2nd day. Now talks are starting to heat up surrounding the debt ceiling, and if a stalemate grows there it is more likely to have negative spillover effects on the market.
Asian markets were mixed overnight. China was closed and Japan fell -2.2% after the govt. decided to rise the sales tax but did not offer any cuts to the corporate tax.
European markets are lower today also. But Italy is bouncing after things seem to be less bad for the collapse of the govt there.
The 10-year yield is fading again, falling below the 2.60% level. Bond yields had a big rise from May to September, so it could just be that they are in a consolidation period right now.
The dollar is lower today and that is helping boost commodities. Gold prices are bouncing sharply back above the $1300 level to $1320. But a look at the gold etf shows that it is still trading below its 50-day moving average. Oil prices are also higher today near $103.20.
The volatility index is spiking today also, up 6.5% currently to 16.55. When the VIX has been above the 15 level this year it has marked a period of heightened volatility for stocks.
Trading comment: The S&P 500 bounced from its 50-day support yesterday, but today it is back down testing those levels (SPX 1680). If it holds then we should see more of a bounce, but if support is broken we could see the S&P go back down and test the 1640 level that it hit last month. Some of this is likely to depend on how the negotiations go over the debt ceiling talks. It is very frustrating that Congressmen use this as a leverage tool. We are the only developed country that even has an official debt ceiling, and considering it gets moved up every time does it really make sense to have it at all?