Manufacturing report reverses impact of monthly employment report

Sept. 5:

Friday may have started with an employment report indicating an increase in the unemployment rate from 3.5% to 3.8%, and Treasury yields dropping about 5 basis points, but that wasn’t the end of the story.

Later that day, the ISM Manufacturing PMI for August showed a little more strength than had been expected, up to 47.6 in August from 46.4 in July. Even though any number below 50 indicates an outlook for contraction in manufacturing, that increase was sufficient to cause Treasury yields to reverse course.

State of the market

The Dow traded down 42 points this morning. Treasury yields were a few basis points higher than at the close of business on Friday.

Economic calendar

Tuesday, Sept. 5

• Factory Orders

Wednesday, Sept. 6

• Trade Balance Report
• ISM Services PMI
• The Federal Reserve releases its Beige Book, a look at the state of the economy in each of the Fed’s 12 districts.

Thursday, Sept. 7

• Nonfarm Productivity/Unit Labor Costs
• Weekly Initial Jobless Claims

Friday, Sept. 8

• Consumer Credit

Treasury calendar

There are no auctions of Treasury notes or bonds this week.

By Mike Kraft, Executive Director and Commercial Real Estate Treasurer for Commercial Banking