Interest Rate Cuts and Payrolls In Focus

US index futures are in consolidation mode this morning digesting yesterday’s 1.25% gain for the S&P 500 that carried it to a new all-time high, and nearly 2.0% rally for the NASDAQ. Gains were led by large cap technology stocks and boosted by a positive surprise in US Service PMI.

European markets are up across the board with the Dax up 0.6% and the FTSE up 0.4%. The European Central Bank followed the Bank of Canada, as was widely expected, in cutting its benchmark interest rate by 0.25%. Next Wednesday the Fed meets and while FOMC members have continued to talk the “higher for longer” party line, investors may look to the Fed Funds forecasts for hints on when US rate cuts could start.

Ahead of the Fed decision traders will have employment and wage inflation numbers to sort through. So far this week, US ADP payrolls disappointed and today’s weekly US initial jobless claims were also worse than expected (229K vs street 220K). Tomorrow morning brings US nonfarm payrolls (street 185K) and average hourly earnings (street 3.9%), plus Canada employment change (street 22K) and average hourly wages (previous 4.8%).   

Non-equity markets appear to be stabilizing. The US 10-year treasury note yield appears to be finding some support near 4.30%. US Crude Oil is up 0.8% but still below $75.00/bbl, while Natural Gas is up 2.0%. Copper is up 1.1%, while Gold is up 0.2%.

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