ADP said private sector payrolls fell 39k in Sept and was worse than expectations of a gain of 20k. Aug however was revised up by 20k to a gain of 10k from the initial reported decline. ADP said “a deceleration of employment occurred in all the major sectors…and for all sizes of payroll. There simply is no momentum in employment.” The service sector did add jobs by 6k but was more than offset by a 28k drop in construction and 17k job fall in manufacturing. Within the service sector, financial services lost 13k jobs. Bottom line, as I mentioned earlier, the markets have the reality of a sluggish economy on one hand faced up against more QE on the other. With this said, market participants pay much more attention to the Government Payrolls report and thus Friday’s figure will be more market moving.

According to the MBA, the average 30 yr mortgage rate moved to a new low of 4.25% and it helped to spur applications for puchases as they rose 9.3% to a 5 month high. Refi’s however remain immune to the rate drop as they fell 2.5%, down for a 5th week to an 8 week low. ABC confidence fell 2 pts to -47, an 8 week low. Digressing to Japan, the yen has now officially round tripped its intervention move as it closed at 83.04 the day before the Sept 15th BoJ action.

The main stock market battle over the past few months has been the tug of war between economic challenges on one hand and the Fed’s printing press on the other with the Fed’s influence of course winning for now. Ahead of the Nov election and Nov 3rd FOMC statement, the free gov’t put on the market will likely remain in place over the next month and possibly into year end but may be subject to some shaking of the tree beginning today and thru the next 3-4 weeks as jobs data and Q3 earnings releases take center stage. Fitch downgraded Ireland’s credit rating to A+, 1 notch below S&P and 2 below Moody’s due to the “exceptional and greater than expected fiscal cost with the government’s recap’s of the Irish banks.” If only Ireland let senior bond holders take a haircut and in choosing not to it highlights a main risk with bailouts in general as opposed to allowing business failure, when trying to buy time, time sometimes runs out.

Category: MacroNotes

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