The number of job openings in the US rose in August to 8.04m, up from 7.71m a month earlier and substantially beating market expectations. Private sector job openings increases to 7.07m with professional and business services seeing a move higher in August along with leisure and hospitality. The number of government job openings also increased. The level of layoffs remains quite low suggesting that firms aren’t losing workers for economic reasons while hiring and voluntary quitters also were quite low in the August print.
The ISM manufacturing gauge was unchanged at 47.2 in September, extending its run below the neutral 50 level since March this year. Production improved month/month but was still in the contraction side of the measure at 49.8 while new orders and backlogs of order also ticked up. The employment component dropped to 43.9 while prices paid also fell sharply to 48.3 from 54 a month earlier.
Inflation in the Eurozone dropped below the European Central Bank’s target level in September, falling to 1.8% y/y from 2.2% in August. Core inflation also eased to 2.7% y/y. Both measures largely came in line with market expectations. Lower energy prices are helping to bring European inflation lower as services price growth still remains fairly high at 4% y/y in September.
Today’s Economic Data and Events
- 16:15 ADP employment change Sept: forecast 125k
Fixed Income
- US Treasuries received a moderate haven bid overnight with yields on the 2yr down about 4bps to 3.6043%. Yields on the 10yr were lower by almost 5bps at 3.7315%. The release of the non-farm payrolls at the end of the week will be the next major barometer for the direction of Treasuries.
- Bonds generally had a positive session yesterday with gains across Europe as well as emerging market bonds.
FX
- Risk aversion prompted a flight to safety in currency markets with the broad dollar index higher overnight. EURUSD fell by 0.6%, abetted by below-target inflation clearing the way for the ECB to continue cutting rates, while GBPUSD dropped by 0.7% to 1.3286. USDJPY was near stable at 143.57.
- In commodity currencies CAD appreciated with the USDCAD pair down by 0.3% to 1.349 while AUDUSD fell by 0.4% to 0.6883 and NZDUSD fell by 1.1% to 0.6281.
Equities
- US equity markets closed sharply weaker overnight with the S&P 500 down 0.9% and the NASDAQ off by 1.5% as fears grow over spreading tensions in the Middle East and North Africa. European markets fared poorly as well with the EuroStoxx lower by 0.9% while the FTSE was up by 0.5%, helped by the high weighting of resource firms.
- Regional markets were mixed with the DFM lower by 0.6% while the ADX added 0.1%. The Tadawul was higher by 0.2%.
Commodities
- Oil markets spiked in response to the regional tension but capped some of the more extreme moves of the day. Brent futures rose by 2.5% to USD 73.56/b while WTI added 2.4% to USD 69.83/b. Both are trending higher today as markets price in a sustained period of regional geopolitical anxiety.
- The OPEC+ JMMC meets today to give an indication if the producers bloc is sticking with its plan to increase output later this year after having delayed the initial start date by two months.
- The API reported a draw in US stocks of 1.5m bbl last week while there was an offsetting build in gasoline inventories of 0.9m bbl.
