Market commentary

Initial jobless claims bounced back above 400k for the week ending January 1 after having fallen below the important mark for one week. The markets have rebounded slightly from Wednesday’s drubbing; however, trading today will be with the specter of tomorrow’s payroll report looming large. There are plenty of reasons to believe that the report will surprise to the upside following a recent retreat in the number of initial jobless claims applications and the shockingly strong ADP employment report yesterday. However, there are also reasons to believe the report will not be as strong as ADP predicts given the downtick in the employment subcomponents of the ISM reports. A revised Bloomberg poll of economists now puts private job growth at +175,000, up from previous estimates of +150,000. These expectations are currently priced into the stock and bond markets. Any surprise to the upside will definitely move interest rates higher.