Today feels like a hump day, probably because it is a short work week, yet market participants are sitting patiently this morning waiting to get over the hump on a number of important issues.
The budget and debt limit negotiations are chief among them and progress appeared to be made on Wednesday (the real hump day) when President Trump and Democratic leaders agreed to a deal that would package Hurricane Harvey relief funding with a three-month extension of government funding and the debt ceiling.
What remains to be seen is if the GOP-controlled House will get on board with that deal, which House Speaker Ryan had said (prior to the president agreeing with it) was "unworkable."
That sense of opposition and the realization that a three-month extension only kicks the can down the road, setting up a likely contentious standoff at the end of the year when the White House would like to have a tax reform package done, curtailed some of the market's enthusiasm for the reported deal in Wednesday's trade.
Nevertheless, there was a buy-the-dip effort that prevailed and led to modest gains for the major indices, which remain negative for the week. Currently, the futures for the major indices are little changed, although they lean toward indicating a slightly higher open for the major indices.
The other humps on the immediate horizon include North Korea and Hurricane Irma. Reports have suggested both could strike this weekend, with North Korea conducting another missile test and Irma potentially running over South Florida or up the Atlantic coast.
That's a waiting-and-watching game that no one enjoys playing.
The waiting and watching for the latest ECB policy decision is over. As expected, the ECB elected to leave its key policy rates and its asset purchase program unchanged.
In his press conference, ECB President Draghi acknowledged a decision on the bank's QE program in 2018 will be made later this year and that risks to the outlook remain balanced. He added that the bank is not targeting an exchange rate but that the level will factor into policy decisions.
The euro has rallied sharply in the wake of his remarks, up 1.0% at 1.20 against the dollar. That move has knocked the US Dollar Index 0.7% lower to 91.66.
Separately, this morning's economic data was mixed and came with an asterisk in the case of the initial claims report.
The latter showed initial claims spiked by 62,000 to 298,000 (Briefing.com consensus 239,000) for the week ending September 2. Continuing claims for the week ending August 26 decreased by 5,000 to 1.940 million.
The key takeaway from the report is that the spike in initial claims was impacted by Hurricane Harvey, which is to say it is an aberrant reading in relation to an otherwise encouraging trend for initial claims.
Second quarter productivity, meanwhile, was revised up to 1.5% (Briefing.com consensus 1.2%) from 0.9%, as output increased 4.0% and hours worked increased 2.5%. Unit labor costs were revised down to 0.2% (Briefing.com consensus 0.3%) from 0.6%, reflecting a 1.8% increase in hourly compensation and a 1.5% increase in productivity.
The upward revision for productivity was in sync with the upward revision to second quarter GDP growth seen last week. The key takeaway from the report is that the subdued growth in unit labor costs will contribute to the market's thinking that the Fed has scope to hold off on another rate hike this year.
In other developments, The Wall Street Journal reported that National Economic Council Director Gary Cohn is unlikely to be nominated by President Trump for Fed Chairman based on Mr. Cohn's public rebuke of the president's divisive remarks following the Charlottesville incident.
This report, as well as Stanley Fischer's surprise resignation yesterday from the Board of Governors, will simply feed the elevated sense of uncertainty right now surrounding the future leadership structure of the Federal Reserve. To be sure, the waiting-and-watching game is still very much in play on that front.