The Day Ahead: Markets Steady Before ADP Jobs, Chicago PMI, Factory Orders

One of the most volatile months in the history of the bond and equity markets looks to end softly.

Treasuries are steady from Tuesday's closing yields, with the two-year at 0.20%, the 10-year at 2.18%, and the 30-year at 3.52%.

The benchmark 10-year Treasury yield fluctuated from 3.20% to 1.97% this month.

Equity futures are on track for a positive open after three consecutive gains. The S&P looks to open down 12.1 points higher at 1,216.90 and Dow futures are off 86 points at 11,578. 

"There's an upbeat tone in equities after German Chancellor Merkel's Cabinet passed the July 21 Greek bailout plan and EFSF expansion," said BMO Capital Markets in a morning note. "The measures still have to pass Parliament, with the vote tentatively set for Sept 29. However, seeing as the Cabinet voted in favor, that bodes well for Merkel getting sufficient votes from her majority coalition to pass the plan."

As of Tuesday, the S&P had dropped 6.14% in August.

Light crude oil is 1.15% lower at $87.86 per barrel, while gold prices are 0.16% higher at $1,833.00.

In fresh data, the latest weekly MBA mortgage apps index fell 9.6% in the period ending Aug. 26, led by refinancings.

Key Events Today:

8:15 - The ADP Employment Report is expected to show private job growth in the range of 105,000 for August. High Frequency Economics assumes a 100k figure, including the loss of 45,000 Verizon jobs. Few others offered a forecast. (BMO pointed out this morning that ADP underestimated by 40k last month).

9:45 - The Chicago Business Barometer came in worse than forecasts in July, dipping to 58.8 from a previous 61.1. Now, the August report is expected to fall quite a bit further. The median estimate is 53, its lowest score since third-quarter 2009. Some forecasts are even below the 50 threshold.

"Business confidence measures across the board have recoiled from the events in Washington DC and the market collapse in late July and early August," said Citigroup. "Although the Chicago index has been consistently stronger than other regional and national surveys, we think that it will not be able to go against the grain this time."

10:00 - Factory Orders were cut 0.6% in June, but this month's 4% gain in new orders for durable goods has set a new tone. Economists are looking for a 1.5% rebound.

"Factory orders likely rose at a healthy clip in July based on the already reported increase in durable goods," said Citigroup. "Nondurable goods were probably once again about unchanged as gasoline price declines offset other modest increases."

Nomura, which looks for a 2% gain, added that "price strength from rising commodities over the month should lift nondurable inventories and orders."