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Syndicated Loan Market Commentary 09/01/2010

Overnight China’s manufacturing numbers showed improvement which helped get equities started off on the right foot. China’s August PMI jumped to 51.7 from 51.2 in July. Futures pointed to a higher open and the LCDX 14 was quoted at 94 15/16 – 95 3/16 (+3/16).  With double dip fears suppressed globally the Aug ADP number, which showed a loss of 10k jobs, was viewed as a non-event. At 10am the US August ISM numbers hit the wire and unexpectedly rose, pushing equities even higher. August ISM Manufacturing came in at 56.3, up from 55.5 in July and 3.3 points higher that expected. Its funny what a couple of strong data points can do to a market. After the morning rally things were flat and the Dow and S&P 500 closed at 10,269.47 (+2.54%) and 1,078.15 (+2.75%) respectively.
 
The loan market took its cues from equities and was well bid. High quality names firmed anywhere from a quarter to half of a point. Off the run paper was up a quarter. Trading was the most active it has been in a while as the positive ISM manufacturing numbers out of both the US and China gave investors the push they needed to get involved. While trading was largely situational, the pick up in activity made it easier to get stuff done. The LCDX 14 was active and closed at 95 1/4-95 1/2 (+5/8). Tomorrow we get the initial jobless claims number, July pending homes sales and factory orders in the morning, which will set the pace of the day. The pre-market jobs number will be the big morning headline and is expected to come in at 475K, so let’s hope its not much lower than that. But, the 10 a.m. numbers will move markets, so let’s hope that factory orders number can impress; maybe like today, the market will ignore jobs.  Have a good night.