Closing Out August
- China PMI 8/31 9:00pm Last Month 51.2 Consensus This Month 51.0
- ISM Manufacturing 9/1 10:00am Last Month 55.5 Consensus This Month 52.5
- U.S. Total Employment 9/3 8:30am Last Month -131,000 Consensus This Month -100,000
- U.S. Private Employment 9/3 8:30am Last Month +71,000 Consensus This Month +45,000
- U.S. Employment Rate 9/3 8:30am Last Month 9.5% Consensus This Month 9.6%
Please note that in terms of forecasting U.S. unemployment figures, Goldman Sachs has been extremely accurate in 2010. I tend to focus more on their forecast than the consensus. To that point, Goldman is expecting a far more disappointing report on Friday, especially in Private Sector jobs. GS expectation: Total Employment -125,000 Private Employment 0 Rate 9.6%.
In terms of the recent trading activity of the capital markets, the fixed income and energy markets traced out intriguing reversals this week. On Wednesday, August 25, the 10 year U.S. Treasury traded to 2.41%, its lowest level since January 2009. Also on Wednesday, the 30 year U.S. Treasury traded to 3.46%, its lowest level since March 2009.
However, both the 10 and 30 year yield surged on Friday, August 27, potentially establishing a significant change in trend. The Treasury market is at the top of my watch list currently and I urge investors to keenly watch if Treasuries have, in fact, traced out a significant reversal.
On Wednesday, August 25, the Department of Energy reported a significant rise in oil inventories. The oil futures market responded that day, selling off to $70.76, its lowest level in two months. However, by the close of business on Friday, a potentially dramatic change in trend was traced out, as oil futures reversed the selling pressure and advanced to a weekly close @ $75.17.
The reversals in Treasuries and oil are, at the very least, concrete examples that investors should avoid the "go to cash" premise rather actively trumpeted this past week. Please take a look at the six charts below.US 10 YR TREASURY 7/2/10 TO 8/27/10
US 30 YR TREASURY 7/2/10 TO 8/27/10
US 10 YR TREASURY WEEKLY 9/5/08 TO 8/27/10
US 30 YR TREASURY WEEKLY 9/5/08 TO 8/27/10
SPOT OIL FUTURES 6/9/10 TO 8/27/10
DOE OIL INVENTORIES