At one time yesterday the rout yesterday in the two year Treasury—or the instrument most sensitive to monetary policy—was the biggest in ten years according to Bloomberg.  The 10-year saw the biggest increase since November 2016.  The catalyst for the selloff was three fold…trade, the ADP Private Sector Employment Survey and third the ISM non-manufacturing index.  I have little comment about trade.

Regarding the ISM non-manufacturing index, August saw the sharpest monthly rebound in business activity since early 2008 rising to a three month high.  The prices paid index also rose by an amount greater than expected, significantly exceeding July’s level.

Regarding the ADP Employment Index, private companies added the most jobs in four months.  Analysts had expected a 148,000 increase versus the 195,000 reported increase.  Weekly jobless claims were little changed, near the lowest level since 1969.

Today the BLS Employment report is released.  Analysts are expecting a 160k and 150k increase in non-farm and private sector payrolls, respectively, a 3.7% unemployment rate, a 0.3% increase in average hourly earnings, a 34.4 hour work week and a 63.0% labor participation rate.

The data could reinforce the emerging narrative that the economy is indeed stronger than suggested.  The data is released at 8:30.

Last night the foreign markets were mixed.  London was down 0.10%, Paris down 0.03% and Frankfurt up 0.39%.  China was up 0.46%, Japan up 0.54% and Hang Sang up 0.66%.

The Dow should open nominally higher ahead of the jobs but this could radically change. Moreover FRB Chair Powell is speaking today. While he is expected to say little about monetary policy and comments from a FRB official could move markets. The 10-year is off 13/32 to yield 1.61%.

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