The Market Today

ADP Report Disappoints, Auto Sales Plunge, CDC Extends Eviction Moratorium

by Craig Dismuke, Dudley Carter

CORONAVIRUS UPDATE (Chartbooks: Vining Sparks Coronavirus Chartbook and Vining Sparks Coronavirus State Charts)

White House May Act to Stop Some Evictions: The CDC issued a targeted eviction moratorium lasting through October 3 citing the public health risk of evictions in certain areas of high COVID-19 infections.  This will apply to areas of substantial or high levels of COVID-19 transmission, the same wording used last week to determine the areas in which the CDC’s new mask guidance applies.  This qualifications includes counties in which there are more than 50 new cases per 100k population over the course of a week. As of this morning, 2,604 of 3,219 U.S. counties fit this description. The ruling is likely to face legal challenge. According to a report from the WSJ, the move “could buy states and localities more time to distribute about $47 billion in rental assistance designed to help tenants harmed by the pandemic who have fallen behind on their rent. As of June 30, just $3 billion of that money had reached tenants and landlords.”

NYC to Require Proof of Vaccine for Targeted Businesses: New York City announced plans yesterday to require employees and customers of restaurants, gyms, and entertainment businesses to require proof of vaccination.  The policy is set to go into place August 16 with enforcement beginning September 23.


ADP Reports Disappointing 330k Private Payrolls Added in July: The ADP employment report showed a disappointing 330k private payrolls added in July.  The report was expected to show 690k payrolls added and will lower heightened expectations for Friday’s BLS payroll report.  The weakness was broad-spread across sectors indicating it likely reflects the current labor market tension of too few applicants to fill record-high job openings.  Goods-producing jobs increases just 12k while the service sector added just 318k, down from the 650k average over the past three months. According to the ADP data, there remain 6.5 million private payrolls missing.

Mortgage Applications Drop Again: Mortgage applications for the week ending July 30 fell 1.7% despite the average 30-year mortgage rate falling from 3.01% to 2.97%.  Both purchase apps and refi apps fell 1.7% for the week and remain down 27% and 22% from January, respectively.

Service Sector PMIs and Fedspeak: The final July Markit services PMI is scheduled for 8:45 a.m. CT.  The July ISM service index is expected to rebound somewhat from its June decline (9:00 a.m.).  Also today, Fed Vice Chair Clarida is scheduled to speak at the Peterson Institute (9:00 a.m.).


Auto Sales Plunge as Inventories at Record-Low Level: Auto sales fell even more than expected in July, down from 15.36mm (annualized) to 14.75mm. Sales are now down 20.3% from their April peak.  Based on a separate BEA report, new auto inventories have dropped 62% in 2021 through June as demand has outpaced new production.  Total inventory in June stood at just 168,700, the lowest level on records back to 1967.

Solid Business Equipment Investment in Better-Than-Expected Factory Orders Data: Factory orders rose 1.5% in June, topping expectations for a 1.0% gain, and May’s 1.7% rise was revised up to 2.3%. Excluding transportation categories, orders rose 1.4% in June and 1.0% in May. Tracking capital goods activity, which provide monthly indications of trends for business investment in equipment, orders of core goods were revised up from an initial estimated gain of 0.5% to 0.7% while shipments were confirmed to have risen 0.6% from May. In addition to positive implications for revisions to second quarter GDP growth, the trajectory of business spending heading into July bodes well for third-quarter activity.


Recovering from early declines, Treasury yields ended marginally lower Tuesday, holding at five-month lows even as stocks regained some ground. An uneventful economic calendar kept the focus on recent concerns around the delta COVID-19 variant and technical momentum and levels for interest rates. The 10-year Treasury yield continued to trade below its 200-day moving average while the 5-year yield inched within a couple of basis points of crossing over its own. The 10-year yield ended the day 0.5 bps lower at 1.172%, a new low close since February 11. The 5-year yield closed down 0.6 bps at 0.647%, its lowest level since February 24. The Dow and S&P 500 both gained 0.8%, the latter closing at a new record high and supported by widespread gains across ten of its eleven sectors.

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