September 1, 2022
Jobs: The Fed has been clear that it wants to see some cooling in labor markets. Consensus for tomorrow’s release of August payrolls is looking for +300,000. A number resembling yesterday’s ADP private payroll adds of +132,000 would take bond yields lower and equities higher. Consensus expectations are looking for an unchanged 3.5% Unemployment Rate with wages up +5.3% YoY from +5.2% in July.
SPX: This morning’s stronger August ISM manufacturing report is taking 10-year Treasury yields to ~3.25%, which is through the upper-end of our near term target range of ~3.10-3.15%. Higher yields are pressuring the S&P 500 into our technical support zone of 3900-3945. Concerns into tomorrow’s Jobs Report amid light attendance and low liquidity may be exaggerating the reaction, but closing levels below 3890 would likely set the stage for a full retest of the 3660 June low.