Daily Commentary
Commentary prepared by Alloya Investment Services, a division of the wholly owned CUSO of Alloya Corporate Federal Credit Union. Alloya Investment Services is a leading broker/dealer consultant to credit unions.
Friday, September 6, 2024 at 8:00 am CT
Commentary prepared by Tom Slefinger, Market Strategist
Market Indications
Other Market Indicators
| Market Indicators | ||
|---|---|---|
| 2s/5s Tsy Spread | -0.20 | +0.01 |
| 2s/10s Tsy Spread | -0.01 | +0.00 |
| 2s/30s Tsy Spread | +0.28 | -0.02 |
| DJIA-30 | 40,755.75 | -219.22 |
| S&P-500 | 5,503.41 | -16.66 |
| NASDAQ | 17,127.66 | +43.37 |
| Dollar Idx | 101.06 | -0.30 |
| CRB Idx | 271.27 | +1.01 |
| Gold | 2,516.76 | +21.04 |
Daily Commentary
Market Recap - Stocks whipsawed ahead of U.S. jobs data that will be key in determining the size of a Federal Reserve rate cut in September. The S&P 500 dipped 0.3%, while the Dow lost 0.54%. The Nasdaq gained 0.25%, after rising as much as 1.2% earlier in the session. Treasury 10-year yields slid three basis points to 3.72%. The dollar slipped. West Texas Intermediate crude was little changed. Spot gold rose 0.8%. The dollar declined 0.2% and Bitcoin fell 3.4%.
U.S. companies added the fewest jobs last month since the start of 2021, providing yet another sign of a deteriorating labor market according to data from the payrolls processing firm ADP. Private payrolls increased 99,000 in August, less than the downwardly revised 111,000 in July and below the consensus forecast for 140,000. Annual pay increased 4.8% for those who stayed in their jobs, about the same level as July. While the ADP data showed that hiring has slowed considerably, only a few sectors reported actual job losses. Professional and business services declined 16,000, manufacturing lost 8,000 and information services declined by 4,000.
Outplacement firm Challenger, Gray & Christmas reported layoffs soared in August, hitting their highest total for the month in 15 years, while year-to-date hiring reached a historic low. Announced job cuts totaled 75,891 for the month, lurching 193% higher than July. On the hiring front, companies said they were adding just 6,101 new workers, up by nearly 2,500 since July, but down more than 21% from August 2023. The year-to-date hiring announcements of nearly 80,000 is the lowest total in history going back to 2005.
U.S. services activity expanded at a modest pace for a second month. The Institute for Supply Management (ISM) services Purchasing Managers’ Index (PMI) was little changed in August at 51.5. Readings above 50 indicate expansion. Employment neared stagnation and order backlogs plunged. The employment index slipped to 50.2 during the month, according to the figures issued Thursday.
Mortgage rates in the U.S. hold at the lowest level since May 2023. Mortgage rates in the US held steady, giving homebuyers a crack at the lowest loan costs since May 2023. The average for a 30-year, fixed loan was 6.35%, the same as last week, Freddie Mac said in a statement Thursday. The decline in mortgage rates so far hasn’t been enough to motivate hesitant homebuyers, who may be holding off until financing gets cheaper. Affordability also remains a hurdle, with prices at or near record highs in many parts of the country.
U.S. Nonfarm payrolls expanded by 142,000 during the month, down from 89,000 in July and below the 161,000 consensus forecast, according to the Bureau of Labor Statistics (BLS). At the same time, the unemployment rate ticked down to 4.2%, as expected. There were 114,000 jobs added in July, and the unemployment rate was at 4.3%. Note that the previous two months were revised to remove 86,000 jobs. So that means the payroll level for August is all that much weaker than the median expectation. Average hourly earnings are up 3.8% for the year to August, handily beating any measure of inflation. So, that’s good news from a purchasing-power standpoint.
The day ahead – Stock futures are pointing lower with S&P Futures tied to the broad market index were down 0.6%. Dow Jones Industrial Average futures dropped 160 points, or 0.4%. Nasdaq 100 futures slid 1%. At 8:30 am ET we get the all-important Employment Report for August. A Bloomberg gauge of the dollar has fallen to session lows after the release and as the revisions to prior figures come in. Meanwhile, Treasuries are extending their advance, although the intraday moves are so far smaller than 10 basis points across maturities.
Have a great day!
Economic Calendar
September 3 - 6, 2024: The Week Ahead
Future Fed Expectations
Source: Bloomberg
| Select Probabilities based on the Futures | |
|---|---|
| Probability of Fed Funds rate CUT on September 18, 2024 | -136% |
| Probability of Fed Funds rate CUT on November 7, 2024 | -133% |
**All quoted rates are indications and are subject to change without notice.
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