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Nonfarm Payrolls Increase Smallest in 9 Months

STOCK INDEX FUTURES

Lawmakers agreed to a deal for a short-term extension to the debt limit in the Senate on Thursday, which helped boost market sentiment. Traders are watching negotiations in Congress closely, as lawmakers debate increasing the debt ceiling ahead of a deadline this month.

Nonfarm payrolls increased only 194,000 in the September, the least in 9 months, when a gain of 500,000 was expected. Private payrolls increased 317,000 when 445,000 were anticipated and the unemployment rate was 4.8% when 5.1% was predicted.

The labor participation rate was 61.6% when 61.7% was estimated.  Average hourly earnings increased 0.6% when a gain of 0.4% was expected.

The 9:00 central time August wholesale inventories report is predicted to show a 0.6% increase.

Today’s relatively weak employment data may put pressure on the Federal Open Market Committee to delay a tapering of its $120 billion per month in asset-purchases, which is why stock index futures advanced soon after the employment report was released.

The longer-term fundamental and technical aspects remain supportive for stock index futures.

CURRENCY FUTURES

The U.S. dollar index is near a one-year high, but is lower today in response to the on balance weak U.S. employment data.

In spite of lower prices today, interest rate differential expectations remain supportive to the greenback, and higher prices are likely at least up until the November 3 FOMC policy meeting.

INTEREST RATE MARKET FUTURES 

Futures are mostly higher.

Cleveland Federal Reserve Bank President Loretta Mester said on Thursday, both supply-side and demand-side factors are contributing to U.S. inflation currently, but most of the recent price changes may be driven by pandemic-related shifts that could subside over time.

I believe a tapering  from the FOMC will be a dovish tapering with any reduction being small.

The next leg up for the 30-year Treasury bond futures will likely be after next FOMC meeting on November 3.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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