Investors On Edge Seeking Guidance About Monetary Policy, U.S Employment Data

ngU.S. Stock futures are mostly flat to slightly negative on Thursday morning as investors wait to digest the impact of monetary policy from the European Central Bank (ECB) as the central bank attempts to confront sluggish growth and the threat of deflation in the 18 member euro area.

Latest news from the ECB this morning revealed that the ECB decided to leave interest rates unchanged as expected.  The ECB left its main lending rate at 0.05 percent and deposit rate at -0.20 percent.

ECB President Mario Draghi is currently speaking at a press conference and was expected to announce plans to buy asset-backed securities and covered bonds.

Some investors have been clinging to the hope that the ECB would undertake a quantitative easing program similar in scope to the one the U.S. Federal Reserve has just completed.

Draghi has just said in today’s press conference, “We’ve done a lot already so let’s see”.

Global markets are increasingly on edge and volatility remains high after Wednesdays selloff in the U.S. stock market related to global health concerns related to Ebola combined with mixed economic data.

September ISM manufacturing data came in weaker than expected and rose to 56.6 compared to 59 in August.

September’s ADP  report showed 213,000 private sector jobs added in September, slightly missing estimates of 225,000 from but above 202,000 in August.

“September’s jobs added number marks the sixth straight month of employment gains above 200,000. It’s a positive sign for the economy to see the 200,000-plus trend continue,” said ADP CEO and president Carlos Rodriguez in a released statement.

Investors are interpreting key U.S. economic data through the prism of the U.S. Federal Reserve’s monetary stimulus policy concerning short-term interest rates, especially now that the Fed’s quantitative easing (QE) program is ending this month.

There is lingering speculation in the market over the timing of an interest rate hike that is expected sometime in 2015.

Strong economic data and rising inflation are viewed as positive catalysts for Fed policy makers to support a rate hike earlier in 2015.

The September non-farm payroll employment report, released tomorrow morning will be closely watched, especially since August’s non-farm payroll report missed the mark at 142,000 jobs and dropped well below consensus estimates despite a healthy improvement in jobs over the spring and summer months.

The briefing forecast from expects 245,000 non-farm payroll jobs in September while the unemployment rate is expected to hold steady at 6.1 percent.

-Johnathan Schweitzer

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