September 3, 2022

Weekly Market Commentary August 29th to September 2nd 2022

Economic data was light to start the week but picked up on Wednesday with the Institute for Supply Management Manufacturing Index for August. The survey expanded for the 27th consecutive month to 52.8, above the estimate of 52.0 and unchanged from the previous month. Overall, respondents noted that demand remains steady and that pricing costs are declining as the sector is approaching supply/demand equilibrium.

Also released on Wednesday was the ADP® National Employment Report for August, showing an increase of 132,000 jobs, well-below the estimate of 300,000 but slowing job growth is not surprising as we near full employment.

Friday brought the week’s biggest report with Non-farm Payrolls increasing 315,000 in August, slightly above the estimate of 300,000. Year-over-year hourly earnings increased 5.2%, flat from the prior month. The unemployment rate increased to 3.7%, up from 3.5% and a potential positive development, resulting from the labor force participation rate increasing during the month as more people enter the workforce and should help alleviate wage pressure.

After Friday’s sharp selloff, equity markets traded in a narrow range through Wednesday, but had two big intraday reversals to end the week. Overall, the S&P declined by 3.3% for the week to 3,924 and the third consecutive weekly loss.
The 10-Year U.S. Treasury yield opened the week at 3.10% and closed up slightly at 3.19%. The 2/10 spread remains inverted, starting the week at -32bps but closed at -20bps.

Next week’s economic data includes service sector indexes, the Fed’s Beige Book, and consumer credit.

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