Morning Minutes

Weak ADP Payrolls and Strong Service PMI Data In Focus




Downward momentum from yesterday’s selloff, which saw major US indices fall 1.3%-1.9% continued through Asia Pacific trading where Tokyo and Seoul lost 2.3-2.4%. So far this morning, equities have stabilized with US Index Futures trading up 0.1%-0.3%, while in Europe, the FTSE and Dax are trading flat to up 0.2%.

Treasury yields around the world continue to climb. The US 10-year Treasury Note Yield has climbed above 4.80% to trade at its highest level since 2007, while the 30-year yield peeked above 5.00%. The German 10-year Bund yield is approaching 3.00%, while the UK 10-year Gilt Yield is up above 4.60%. The Reserve Bank of New Zealand, who has been a lead domino in the current global tightening cycle, held its benchmark overnight rate at 5.50% overnight.

Service PMI reports have been rolling out from around the world overnight and the tone has been positive with Australia, Japan, Germany, and the UK all beating expectations. US ISM Service PMI is due at 10:00 am EDT this morning (street 53.6).

The bigger news in North America today is US ADP Payrolls which came in well short of expectations (89KK vs street 153K and previous 177K). US factory orders are due at 10:00 am EDT.

Energy prices are under pressure this morning with US Crude Oil down 1.6% and Gasoline down 2.1%. At today’s OPEC+ meeting, Saudi Arabia announced it intends to keep all production cuts going until the end of the year, while Russia suggested it would review whether to keep 0.5 mmbbl/d of voluntary cuts going next month. Meanwhile, US API weekly oil inventories dropped by 4.2 mmbbls this week. Weekly DOE oil inventories are due at 10:30 am EDT.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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