As we wait for the Germans to vote yes for bailing out Greece, yields continue to head higher in all of the financially stressed European countries with the Spanish 2 yr yield in particular rising to the highest Jan ’09 and their 5 yr CDS now above Hungary at 215/230. Greek 5 yr CDS is right back to the highs at 800/850. The problem in the timing of quelling the debt concerns is that there won’t be some event that calms people down, it will be a process as deleveraging takes time. The Shanghai index bounced .8% from its 7 month low. With global growth likely being tested over the next few months, US economic data over the next 3 days will be a good measure of where we stand in the face of upcoming headwinds with ADP and ISM services specifically out today. ABC confidence rose 2 pts to -47, in line with the 1 yr avg. The MBA said purchases rose 13% in the final rush to capture the tax credit. Refi’s fell 2.1%. II: Bulls 56 v 54 Bears 18.7 v 18
ADP said 32k private sector jobs were added in April, about in line with expectations of 30k and March was revised to a gain of 19k from the initial reading of -23k. The service sector was the main driver of job gains as it added 50k jobs with half coming from small businesses. Manufacturing also helped by adding 29k jobs. Construction though shed 49k jobs and the sector has now lost 2.16mm jobs since the high in Jan ’07. The financial services sector payrolls fell by 14k. Bottom line, as has been seen from the initial claims data, net firings have ended but the pace of hiring, while improved, still remains muted. Friday’s government payroll report will include public sector census workers and the estimated total job gain is 189k, 100k of which is expected to be private sector jobs.