The ADP private employment report and Department of Labor weekly initial unemployment claims report show steady expansion in the U.S. labor market. Jobless claims have been under 350K for eight straight weeks and are at levels last seen in September, 2007. Europe is recovering from recession and Germany reported August construction PMI at 55.1 versus a prior reading of 51.5. The S&P 500 has recovered all of the loss of August 27 when the perceived risk of war with Syria spiked.
The 10-year Treasury rate of 2.94% is at two year highs. The rate has nearly doubled from about 1.6% in early May. Rising interest rates suggest that the risk-on trade (stocks) remains in place and Federal Reserve tapering is mostly priced into the market.