Market Analysis

Bonds are rallying today after a negative day on Friday. Stocks which rallied on Friday are down today. Economic data will become increasingly important as neither stocks or bonds currently have clear directional momentum. Bonds are hitting resistance at 2.5% for the 10 Year US Treasury note. Stocks are showing resistance once the Dow hits the 10,000 level. This week’s economic calendar is particularly packed. Below is a recap:

Monday, August 30, 2010

• July Personal Income, Spending and PCE (Personal Consumption Expenditure) Index – Income was up .2% as expected vs no change in June, Spending was up .4% vs expected .3% increase and no change in June and the PCE Index (a measure of inflation at the consumer level) was up .1% which matched expectations and was up from no change in June.

Tuesday, August 31, 2010

• June Case-Shiller 20 City Home Price Index – expected up 3.1% vs up 4.61% in May.
• August Chicago PMI (Purchasing Mgrs Index) – expected 57.0 vs 62.3 in July
• August Consumer Confidence – expected 50.0 vs 50.40 in July
• Minutes of 8/10 Federal Reserve Open Mkt Committee Meeting – the minutes are expected to paint a gloomy picture of the economy’s near term prospects for recovery.

Wednesday, September 1, 2010

• August ADP Employment Change – expected to show 13,000 private sector jobs added vs 42,000 in July.
• July Construction Spending – expected to show a .7% decline vs a .1% increase in June.
• August Institute of Supply Mgmt (ISM) Manufacturing Sector Index – expected to drop to 52.9 vs 55.5 in July. Should this index drop significantly more than expected, we could see heavy selling in stocks with funds moving to US Treasuries in a continued safe-haven move.

Thursday, September 2, 2010

• Initial Jobless Claims week ended 8/28/10 – expected 2,000 increase to 475,000 from 473,000 the prior week.
• Continuing Jobless Claims week ended 8/21/10 – expected to drop by 21,000 to 4.435 million from 4.456 million the prior week.
• 2^nd Qtr 2010 Revised Productivity and Unit Labor Costs – Productivity expected down 1.7% vs initial estimates down .9% and Unit Labor Costs expected up 1.1% vs initial estimates of up .2%.
• July Factory Orders – expected up .3% vs June down 1.2%.
• July Pending Home Sales – expected no change vs down 2.6% in June

Friday , September 3, 2010

• August Non Farm Payrolls – expected down 120,000 vs down 131,000 in July. Private sector payrolls expected up 44,000 vs up 71,000 in July
• August Unemployment Rate – expected up to 9.6% vs 9.5% in July
• August Hourly Earnings and Avg Workweek – Earnings expected up .1% vs up .2% in July and the Avg Workweek expected unchanged at 34.2 hrs.
• September Institute of Supply Mgmt (ISM) Service Sector Index – expected 53.0 vs 54.3 in July