Phil Orlando, Chief Equity strategist at Federated Hermes, talks about the market’s asymmetric risks.
Stocks retreated as the US government veering toward a shutdown stoked anxieties about the possibly delayed release of key economic data the Federal Reserve needs to keep cutting interest rates.
The S&P 500 fell 0.2%. Gold’s record-breaking rally came to a halt. The Bloomberg Dollar Spot Index slid. Treasuries are headed for a third straight quarter of gains. Oil extended a sharp decline as OPEC+ considers boosting the pace of its output hikes in the coming months.
Even with Friday’s release of nonfarm payrolls data in doubt given a seemingly imminent US government shutdown, traders will still get some glimpses this week of how the labor market is faring. The JOLTS report on Tuesday showed job openings in the US hardly rose in August, suggesting relatively steady demand for workers. Wednesday’s data will give traders insight on company hiring.
Still, many federal operations would pause in the event of a shutdown, and The Bureau of Labor Statistics — responsible for a number of gold-standard US economic releases — would cease operations and likely delay Friday’s payroll report.
This hindrance wouldn’t change the Fed’s decision for at least its upcoming meeting in October, according to David Seif, Nomura’s chief economist for developed markets.
“The less data that comes out, the less reason the Fed would have to deviate from the dot plot,” he said on Bloomberg Television on Tuesday. “The dot plot indicates 25 basis points in October. It is our view that will happen, whether or not they get the data.”
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