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Market Matters

The President and the First Lady both have appeared to have recovered from COVID-19 this week. Now that the President is back in the White House working, the main priority of financial markets is still Washington getting together a second Coronavirus stimulus bill passed. Going into next week, financial markets will still be moving off any progress in getting that second stimulus bill, while also watching how the campaign is progressing for both candidates. If a deal is made it could lead to rates moving higher.

 

Initial Jobless Claims

Initial Jobless Claims for the week ending October 3rd fell by -9k to 840k from a prior upwardly revised 849k. Although still a way off, this is the lowest claims count since 282k in the week of March 14th. Jobless Claims have been above 800k every week since the WTO declared the Coronavirus a pandemic. Continuing claims, which lag by a week, fell by -1.003mln to 10.976mln from the prior 11.979mln. For context, continuing claims were 17.8mln at the end of June, 16.1mln at the end of July, 13.5mln at the end of August, and just under 11mln for September. The 10.976mln for the prior week is now the lowest level since the Covid-19 pandemic began. There are still 25.5mln workers claiming some sort of unemployment benefits, according to figures through September 19th.

 

ISM-Non-Manufacturing PMI

The ISM-Nonmanufacturing PMI for September increased by +.9 to 57.8, posting better than expectations of a drop to 56.3. Respondents conveyed a variety of outlooks, with uncertainty still high in certain sectors such as Educational Services, that are subject to developments on the Covid-19 pandemic. Aside from that, outlooks remained overly optimistic. Within the data, 16 industries reported growth and only one reported a decline in activity (Professional, Scientific & Technical Services). We see gains in business activity, up +.6 to 63.0, as well as, new orders which were up +4.7 points to 61.5. The employment index inched over the neutral 50 mark, up +3.9 points to 51.8. The supplier deliveries index, however, fell -5.6 points to 54.9.

 

Markit Services PMI

In related data, the Markit Services PMI final reading held steady at 54.6, unrevised from the pre-lim print for September. Although this is down from August’s 55.0, it is the highest reading since March 2019. The future expectations index dropped from the pre-lim 57.10 to a final 56.54, and down from August’s final 61.17. New Orders was revised down to 55.02 from 55.13 and is above last month’s 53.86. Backlogs of work index was also revised, up to 53.78 from a pre-lim 53.66, but still below August’s 54.32. Input prices fell to 55.67 from 56.79, to a 3-month low. Finally, the employment index was revised up to 55.08 from 54.36, but still under the 55.57 in August. According to Markit, “Covid-19 worries and social distancing continued to impact many businesses, however, especially in consumer facing sectors, where demand for services fell once again. However, business and financial services, healthcare and housing sectors all fared well as the economy continued to revive, and exports of services also picked up as other countries continued to open up their economies. Sentiment on prospects for the coming year darkened significantly, however, linked to growing worries about virus numbers, uncertainty regarding the presidential election and fears that the economy is susceptible to weakening unless more support measures are put in place soon.”

 

JOLTS

The Job Openings and Labor Turnover Survey (JOLTS) had job openings unexpectedly declining in August, down to 6.493mln from a revised 6.697mln (orig. 6.618mln). The consensus was for a modest increase to 6.685mln. This is now the first decline since April’s 4.996mln, but still well below February's 7.004mln, which itself represented a point on a downward trend since January 2019's peak at 7.520mln. Within the survey report, hires were little changed at 5.9mln, as separations decreased to 4.6mln. Within separations, the quits rate was little changed at 2%, while the layoffs and discharges rate decreased to a series low of 1%.