Daily Market Color

Stocks Advance Ahead of Employment Report

US stocks rebounded during today’s trading session, as the S&P 500 ended a streak of four consecutive days of losses and finished 0.3% higher for the trading session.  The timeline for the finalization of the tax reform bill remains a priority in equity markets, as corporations eagerly await the treatment of the AMT and setting of the corporate tax rate.  US Treasurys experienced a mild selloff, with yields/swap rates rising 1-2 bps across the curve as the 10-year yield reached 2.36%.  The dollar advanced 0.3% against major currencies, although the British pound recovered the majority of its losses this week as it rose 0.7% on the day after it was reported that progress had been made on Brexit talks concerning the Irish border.  In commodities, crude oil futures recovered from yesterday’s demand-driven selloff, as WTI crude rose 1.2% to $56.60/barrel.

 

 

All Eyes on Labor Data

A report from the Labor Department showed weekly initial jobless claims trending near a 44-year low ahead of tomorrow’s monthly payroll figures.  The number of new claims for the week ended December 2nd edged lower to a seasonally adjusted 236,000 (240,000 expected), down 2,000 from the previous week’s revised level.  The four-week moving average of claims also declined slightly by 750 to 241,500, well below the 300,000 threshold associated with a healthy labor market.  Also detailed in the report, the number of continuing claims fell by 52,000 to 1.91 million for the week ended November 25th.

Looking ahead to tomorrow’s payroll data, the headline NFP number is expected to be strong for a second consecutive month as the negative labor impact from September’s hurricanes continues to diminish.  A payrolls figure in-line with expectations or stronger would all but secure a hike by the Federal Reserve at its December meeting next week, where Fed Fund futures currently indicate a 98% probability of quarter-point hike.  The unemployment rate is expected to hold steady at 4.1%, its lowest level in 17 years.   

 

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