It’s one day before the start of the fourth quarter and global stock markets are rallying. US equity futures are looking to erase yesterday’s losses, and with appetite for stocks back in favor the US dollar is weaker this morning, though Treasury yields are lower across the curve.
The main events today are the ADP private jobs survey, a regional business index from the midwest, and a speech from Dennis Lockhart (president of the Atlanta Fed).
In the headlines this morning, the IMF said losses from the financial crisis will be $600 billion less than previous estimates at a total of $3.4 trillion. It applauded various government and central bank policies in reducing systemic risks, but warned that the job is only half done as exit strategies have yet to be implemented.
As for US policy, Charles Plosser, president of the Philadelphia Fed, said yesterday that policy must be aggressive when the time is right. “The real challenge is not can we unwind, but when,” he said, adding: “I don't think the time is now.”
Key Releases Today:
8:15 ― Three weeks of improvement in initial jobless claims is making the case for fewer lay-offs in September, as can be seen in the forecasts for this month’s ADP Private Employment Survey. In August, 260,000 jobs disappeared in the ADP results, whereas this month analysts expect only 195,000 jobs to vanish. Even the range is narrower than usual, from -133k to -260k.
The ADP results have had a mixed record in forecasting the official payrolls number. According to Jennifer Lee, economist at BMO, the survey has been off by an average of 106k over the four months.
“In August, the private sector cut 298k jobs, according to the ADP, or 198k, according to the BLS,” she said. “You get the idea. Take the ADP with a handful of salt.”
8:30 ― A second revision to the second quarter’s Gross Domestic Product report is expected to bump the figure down a notch to -1.2% from -1.0%. Comparing to the -6.4% drawback in Q1, that’s still a major improvement.
9:45 ― The Chicago Business Barometer is often considered the most important forecasting tool for the nationwide ISM survey of manufacturing conditions, even though it measures business in general, including the services industry. In August the survey improved to 50.0, meaning business was flat but on the threshold of growth. This month a score of 52.0 is expected, but an upward surprise wouldn’t be too unexpected as several regional surveys have already bested forecasts this month.
10:30 ― Dennis Lockhart, President of the Atlanta Fed, gives a talk on the economic outlook to the University of South Alabama in Mobile.
