One bit of good news coming off the extended Labor Day weekend is that Goldman Sachs has lowered its probability of the U.S. suffering a recession to just 15% from 20%. The bad news so to speak is that this good news is contributing to an uptick in market rates.<\/p>\n\n\n\n
The 2-yr note yield is unchanged at 4.88% (after hitting 4.93% earlier) but the 10-yr note yield is up four basis points to 4.21%. Those moves have generated some modest headwinds for the equity market, which traded with the wind at its back for most of last week.<\/p>\n\n\n\n
Another holdback component has been the weaker-than-expected Caixin Services PMI report out of China. That number checked in at 51.8, which was weaker than expected and down from 54.1 in July. A number above 50.0 is indicative of expansion, but the pullback from July also signifies a deceleration in activity for China’s services sector.<\/p>\n\n\n\n
The S&P 500 futures are down five points and are trading 0.1% below fair value, the Nasdaq 100 futures are down 34 points and are trading 0.3% below fair value, and the Dow Jones Industrial Average futures are up 20 points and are trading fractionally above fair value.<\/p>\n\n\n\n
Overall, there isn’t much conviction in the futures trade, so things could get better after the open just as readily as they could get worse.<\/p>\n\n\n\n
The hesitation now is partly a function of last week’s solid returns, which came on light volume, and some assumptions that the market might have a little cooling off period.<\/p>\n\n\n\n
Hong Kong’s Hang Seng Index was downright frigid in Tuesday’s trading. It declined 2.1%, driven by losses in property issues and the soft Caixin number.<\/p>\n\n\n\n
The only U.S. economic release on today’s calendar is the July Factory Orders Report. That’s won’t be a market-moving report, but Wednesday’s lineup, which features the August ISM Non-Manufacturing Index, could be.<\/p>\n\n\n\n