From Marc to Market:
Overview: The stronger than expected ISM services, which the market has seemed particularly sensitive this year lifted the two-year yield to about 3.71%, its highest level since the last employment report. The 10-year yield, which had been toying with 3.80%, finally settled above it for the first time in a month. The Dollar Index extended its advance to four sessions, matching the longest in six months. The focus is on the US employment report. The greenback is mixed and is mostly consolidating against ahead of the US employment report. Most emerging market currencies have a heavier bias. The dollar may be more sensitive to a downside surprise than upside given the recent price action and short-term market positioning. That said, the Fed will see another jobs report before its November meeting.
Stocks are firmer, though were off to a less impressive start in Asia Pacific activity. Hong Kong recovered yesterday's losses and rose 2.8%. Japan and South Korea eked out a small gain, while Australia, Taiwan, and India fell. Europe's Stoxx 600 has steadied after dropping nearly 1% yesterday. US index futures are a little firmer. Benchmark 10-year yields are 2-5 bp higher in Europe and the 10-year Treasury yields almost 3.85%. Gold is trading higher in a $2654-$2668 range. Fear of further escalation of the Middle East conflict is helping oil extend its gains after rallying 5% yesterday. November WTI is near $74.50, having finished last week below $69....
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