Market Commentary

Treasuries extended losses overnight and kicked off the session weaker while U.S. equity futures advanced supported by strong corporate earnings. U.S. stocks extended yesterday’s late rally as company results from Facebook, General Motors, GlaxoSmithKline and Sprint among others exceeded earnings expectations. Moreover, the Treasury Department announced to increase the amount of long-term debt it will sell this quarter; treasury yields climbed higher on the announcement. This morning we received solid October Private Payrolls data which moved treasuries even lower while lifting the dollar as investor nerves regarding the strength of the economy calmed. Elsewhere, the Bank of Japan announced to keep its current policy unchanged and trimmed its inflation forecast to reflect below-target inflation through at least the 2020 fiscal year.

The October ADP Employment Change reported that U.S. companies added more workers than expected. Private Payrolls rose by 227k for the month versus an expected 187k gain per consensus; its prior mark was revised lower from 230k to 218k. Also on the calendar, we received the MBA Mortgage Applications for the week ended October 26 which fell 2.50% after increasing 4.90% the week prior. Purchase applications dropped 1.50% after gaining 2.00% the week prior, while refinancing activities slowed 3.80% after a 9.70% increase the week prior. We also received the 3Q Employment Cost Index which rose 0.80% following a 0.60% gain in 2Q. The index indicates that an upward pressure on employment costs continues to gradually increase. Lastly on the calendar, we received the Chicago Purchasing Manager which slipped back in October to 58.40 from a reading of 60.4 prior.