October 7, 2023

Weekly Market Commentary October 2nd to October 6th 2023

The September ISM Manufacturing Index kicked off the weekly data, increasing by 1.4 to 49.0, ahead of the median forecast of 47.9. Despite the increase, this marks the eleventh straight monthly contraction in the sector.

The first of the employment data for the week was received on Tuesday, with the JOLTS job openings report for August and it surprised to the upside at 9.6 million after several monthly declines. The ADP report followed on Wednesday coming in well-below the 150k estimate at only 89k.

The September ISM Services Index slowed 0.9 percentage points to 53.6, exceeding the median economist forecast of 53.5, but remained in expansionary territory for the ninth consecutive month.

Friday brought the most anticipated data, and it didn’t disappoint with nonfarm payrolls for September increasing 336k, more than twice the estimate of 170k. The labor participation rate stayed unchanged at 62.8%, and the unemployment rate held at 3.8%. Wage growth, which is a highly monitored data point by the Fed declined to 4.2% from 4.3%.

The S&P 500 started this week almost unchanged on Monday and declined for three straight days. A sharp reversal in the final trading session pushed the index back into positive territory, higher by 0.5% for the week at 4,308. The yield on the 10-Year U.S. Treasury opened the week at 4.57% and closed at 4.79% after stronger employment gains drove rates higher. With long-term rates increasing at a faster rate than short-term, the 2-10 spread compressed further to -37bps.

Key economic releases next week include a slew of inflation data in the form of CPI, PPI and import and export prices.

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