Following yesterday’s sharp market rally, we enter today with the S&P futures right at its key 200 day moving average of 1098. While we have to keep our eyes on Europe (bond yields higher again) and China (Shanghai index closed at a 13 month low), all eyes today and tomorrow are on the US jobs figures, ADP, Jobless Claims and Payrolls. Today’s ADP report is only a measure of private sector jobs so will not include the large influx of temporary government census workers that will be captured in tomorrow’s data. Also key today will be the May ISM services index. Getting back to Europe for a moment, with both Spanish and Italian 10 yr yields spreads to German bunds at the highs again, banks remain extremely reluctant to lend to each other let alone businesses and consumers as evidenced today by the ECB announcement that banks deposited a record 320b euros with it overnight. PIIGS CDS though are lower by 15-20 bps in Europe.
