Market commentary

ADP’s estimate of private sector created in September came in it at 91,000, slightly more than expected. According to ADP, small business is where job creation is occurring. Since the end of the recession, small business has added 633,000 jobs, medium firms have added 541,000, and large firms have cut 287,000. In other job related news, Challenger, Gray, and Christmas’ job cuts index rose 211% year over year for the month of September. This is the largest year over year increase in the index since the heart of the recession, and was driven by announcements from the Army and Bank of America.

The Institute for Supply Management reported its index for the non-manufacturing sectors of the U.S. economy fell to 53.0 from 53.3 in August. While this index remains in positive territory, the decline reflects the softness in economic conditions.

Fed Chairman Bernanke testified before Congress yesterday, justifying the aggressive role of the Fed by stating the “recovery is close to faltering” and that the U.S. economy is further away from full employment than price stability. His message was that the Fed was trying to spur the economy along but that fiscal policymakers (aka, the President and Congress) had to get involved also. Of course President Obama and Senator Durbin took on the challenge of job creation by attacking Bank of America for its debit card fee increase, the result of Senator Durbin’s legislation that limited the fees banks could charge to retailers for debit card transactions. Apparently the recent announcement by Bank of America that 30,000 layoffs were on the horizon, a cost cutting measure due to lower income, did not make it to Washington D.C.

For a third day in a row U.S. Treasuries are in decline. The yield on the ten year note has risen to 1.885% and mortgage bonds are worse in price by approximately .25%.