Market Commentary

Treasuries lowered overnight as investor jitters faded on news that the Italian government could potentially revise its budget plan to lower its deficit target. The original proposed plan was announced last Friday and revealed that the Italian government agreed to a budget deficit of 2.40% through 2021. The revised plan will look to lower the deficit target to 2.20% in 2020 and down to 2.00% in 2021. Treasuries fell further this morning after the September ADP Employment Change showed a strong gain in private jobs. The labor market remains very tight as the ADP employment rose 230k in September following an upwardly revised 168k gain in August; consensus called for 184k increase. U.S. stocks rose and the dollar gained on the upbeat private jobs data.

MBA Mortgage Applications for the week ended September 28 was little changed and rose just 0.03% after rising 2.90% the week prior. Purchase applications were up 0.10% for the week following a 2.60% increase prior, while refinancing activities showed a slight drop of 0.10% after increasing 3.20% the week prior. Also on the calendar, we received the final September print of the Markit US Services PMI which beat expectations at 53.50 versus 53.00 per consensus. Markit US Composite PMI was revised higher to 53.90 from 53.40 prior. Lastly, we received the September ISM Non-Manufacturing Index which came in higher than expected at 61.60 versus 58.00 per consensus. Several Fed Officials are scheduled to speak today including Fed Evans, Fed Barkin, Fed Brainard, Fed Mester, and Fed Chairman Powell.