An attempt by bulls to fight back after US indexes lost 0.7%-1.0% yesterday has fizzled out amid more signs of a resilient US economy that support the case for interest rates remaining higher for longer.
The US ADP Payrolls report exceeded expectations (184K vs street 148K, last month revised up to 155K from 140K), indicating a robust job market stateside. At 10:00 am this morning, the US ISM Services PMI report is due (street 52.7). In particular traders may focus on the Prices Paid component (previous 58.6) for confirmation or rejection of the uptick in inflation seen in Monday’s ISM Manufacturing Prices Paid number.
Commodity price inflation may also be becoming an issue. Last night API reported a larger than expected drawdown in its weekly US oil inventories (-2.3 mmbbls vs street -2.0 mmbbls), which has helped to push the price of US Crude Oil up 0.7% and above $85.00/bbl. Natural gas is up 0.9%, while in metals action, Copper is up 1.0%, Silver is up 1.8% and Gold is up 0.5%.
Ahead of comments from five more Fed officials today, including Chair Powell, treasury yields are on the rise again with the US 10-year traded rate approaching 4.40% after catching a tailwind from the ADP report. US Index futures are trading flat to down 0.2%. Asia Pacific was broadly down with Tokyo, Sydney and Hong Kong losing 1.0%-1.3%. European action is mixed with the Dax up 0.2% and the FTSE down 0.3%.