Wall Street: ADP reinforces hopes of a rate cut

(CercleFinance.com) - Wall Street is set to open higher on Wednesday morning, still buoyed by expectations of a rate cut from the Fed following mediocre job creation in the private sector.


Half an hour before the opening, futures on the major New York indices were up by between 0.2% and 0.5%, heralding a green start to the session.

The US private sector created just 103,000 jobs in November, well below expectations, according to the latest survey by private firm ADP.

This indicator, which comes two days before the much-awaited official statistics from the Labor Department, has provoked a new bout of weakness in bond yields.

At less than 4.16%, the yield on ten-year paper is back to its lowest level since the end of August.

'History suggests that when the rate hike cycle ends, the overall performance of bonds in the period that follows is exceptional', recalls Columbia Threadneedle.

Hopes of a rate cut have been on the rise in recent weeks, against a backdrop of continuing disinflation and slowing economic activity.

Apart from the ADP employment statistics, investors learned on Wednesday that non-farm productivity rose by 5.2% in the third quarter, following a preliminary estimate of 4.7%.

On the trade front, the US trade deficit widened to $64.3 billion in October, compared with $61.2 billion the previous month.

Renewed hopes of a US rate cut penalized the dollar, with the euro back in touch with the 1.08 threshold after hitting an almost one-month low the previous day.

Oil prices are down sharply on the NYMEX, weighed down by uncertainties surrounding the economy ahead of the morning's release of US crude inventories by the US Energy Information Agency (EIA).

A barrel of US light crude (WTI) is currently down 1.7% at $71.2.

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