A private jobs report showed companies added fewer jobs than forecast and the government shutdown entered a second day. The 166,000 increase in employment followed a revised 159,000 rise in August that was smaller than initially estimated, according to the ADP Research Institute in Roseland, New Jersey. The first day of the federal work stoppage ended with no talks scheduled between the White House and Congress. There have been 17 government shutdowns since 1976, with five of them occurring within three months of each other.
Equities: The DEC13 E-mini S&P 500 (CME:ESZ13) is down 13.75 points this morning to 1675.75. We have a very important pivot level at 1678 on our market profile, and the profile looks like we could see a bearish extension lower to 1664, which is our first downside target. If this market does get to 1664, we would not be surprised to see it follow through lower and shoot for the 1650 level. The market is now well below our other key resistance level we noted yesterday of 1695. It looks as though not only is the gov’t shutdown concerning investors, but now the lackluster jobs # is giving investors two reasons to potentially be bearish the market.
Bonds: The DEC13 US 30yr bond futures (CBOT:ZBZ13) are up 22 ticks to 133’22, now trading above our key level of 133’16. This is a very important level to us. If the market stays above this level, we could easily see a rally higher, possibly to our next resistance level of 134’28. We are keeping in mind that the stock markets are known to take the stairs up, but the elevator down. If the markets decide to take the elevator down soon, we could see flows into bonds.
Currencies: The DEC13 USD (NYBOT:DXZ13) has broken the 80 level, trading down 32 ticks to 79.925. This index could head lower from here as the 80 level is a key psychological level. The DEC13 Euro is up 58 ticks to 135.90, and we still believe this market is headed higher to at least 1.37, possibly even higher. The USD index and the Euro have a very high opposite correlation with each other. Both the Japanese Yen and the Swiss Franc are benefiting from safe haven flows today, with the Yen/USD up 72 ticks to 102.94 and the Swissie jumping above 1.11, but now trading up 51 ticks to 110.98. Our next key target is 111.60, and then possibly even 111.90, but again this 1.11 level is very key for the Swissie. It looks like investors are getting more and more concerned with the “shutdown” and are looking for safe haven assets.
Commodities: DEC13 gold (COMEX:GCZ13) is continuing with its 2013 theme of high volatility, and trading back up $35 today! It could not stay below the key level of $1300. The flows into safe haven assets today are likely supporting gold. NOV WTI crude oil is staging a small reversal of the bearish trend of September, and trading up $1.00 to $103.04. Our key resistance level is $105. We believe the weak dollar is supporting commodity prices today such as crude oil. DEC13 cocoa futures are staying strong above $2600, trading down just $4 today to $2630. Our next target higher is $2700.