Market Analysis

Bonds opened better today and stocks are down.  Volatility for bonds and stocks is expected to remain high for the coming weeks as more economic data tells us whether the US economy is back on track after a “soft patch” in the 2^nd Qtr.  Additionally investors are looking to see more details on the implementation of the deal announced by European Union leaders to address the sovereign debt crisis in Greece and provide a backstop that is viewed as credible for Italy and Spain.  Rumors had speculated that China would be a major buyer of European bonds issued by the European Stability Fund.  This weekend, however, it appears that the Chinese were backing away from any large commitments.

This week is an active week for economic data. Below is a recap of this week’s calendar:

Monday, Oct 31

• October Chicago PMI – expected 58.9 reading vs 60.4 in September

Tuesday, Nov 1

• October Institute of Supply Management (ISM) Manufacturing Sector Index – expected 52.1 reading vs 51.6 in September
• September Construction Spending – expected up .3% vs up 1.4% in August

Wednesday, Nov 2

• ADP Private Sector Employment Change – expected 100,000 jobs added vs 91,000 in September
• Federal Reserve Open Market Committee (FOMC) Post meeting statement and press conference by Fed Chair Bernanke – The Fed is expected to indicate that while the odds of another recession appear to be declining, the Fed remains prepared to act should additional stimulus be needed. No major program announcements are expected.

Thursday, Nov 3

• Initial Jobless Claims for the week ended 10/29 – expected 402,000 unchanged from the prior week.
• 3^rd Qtr Initial Productivity and Unit Labor Cost – Productivity is expected up 2.8% vs down .7% in the 2^nd Qtr. Unit Labor Costs are expected down 1.1% vs up 3.3% in the 2^nd Qtr.
• September Factory Orders – expected down .2% vs down .2% in August
• October ISM Services Sector Index – expected 53.7 reading vs 53.0 in September

Friday, Nov 4

• October Non Farm Payrolls -  Nonfarm payroll employment is expected to increase by 88,000 with 114,000 added from the private sector and 26,000 lost in the public sector.  The unemployment rate is expected to remain flat at 9.1%.