Morning Futures Briefing
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Markets Advance, but Still Striking Cautious Tone Ahead of Tomorrow's Jobs Report

It’s been a choppy week, with earnings and economic data that seem to paint a picture of uncertainty heading into tomorrow’s closely-watched payrolls report. Although the Treasury and crude oil markets have been flashing caution, equity index futures start the day in the green. 

Earnings season has, in a way, been a mixed bag. Overall, earnings have topped consensus expectations, but many top companies have offered up more cautious guidance in their conference calls. And on the data front, although this morning’s initial jobless claims of 385,000 is a 1-month low, it comes on the heels of yesterday’s disappointing ADP private payroll report, which showed jobs having increased by 330,000 in July—about half as much as estimated. 

But the Institute for Supply Management’s July services index surged to a record high in July. Business activity rose as consumer mobility and travel demand picked up over the summer, despite supply constraints. The ISM services index reached an all-time high of 64.1 last month, rising from 60.1 in June, according to the monthly report, which was well above estimates for 60.5. Readings above the neutral level of 50.0 indicate expansion in a sector. 

The yield on 10-yr Treasuries fell to as low as 1.13% on the ADP number but start the day at 1.19%. While that’s still depressed—and thus a cautious tone—relative to recent readings, it seems to have retreated to middle ground ahead of tomorrow’s jobs report.

Crude oil futures, too, seem to have retreated to an equilibrium spot. The end-of-July rally missed $75—roughly the high from the previous leg high back in early July—crude futures sit at the $68 handle to start the day. Weakness in tomorrow’s report could tempt a retest of $65— the low of last month’s break. See chart.

Will tomorrow’s payrolls number—which is pegged at around 925,000 according to consensus compiled by Briefing.com—offer up some needed clarity? Buckle up and stay tuned. 

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Global Economic Calendar

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2:00 AM  - DE Manufacturers Orders
2:45 AM  - FR Industrial Production
4:30 AM  - UK PMI Construction
7:00 AM  - UK BoE Announcement & Minutes
7:30 AM  - US Challenger Job-Cut Report
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8:30 AM  - US Jobless Claims
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