Labor Data, Fed Blackout, and Earnings Take Center Stage in Action-Packed Week
This week's trade in markets—following an action-packed week last week—includes macroeconomic events such as manufacturing PMI, JOLTS job data, ADP non-farm employment change, non-farm payrolls (NFP), and corporate earnings including Dell, Broadcom, and Lululemon.
U.S. Non-Farm Payrolls & Labor Data (Friday, Sept 4): The marquee event of the week. August NFP, unemployment rates, and wage growth serve as the final major labor indicator before the Federal Reserve’s September 15–16 policy meeting. Leading up to it, traders will digest JOLTS job openings, ADP employment, and ISM surveys.
Fed Blackout Period & Rate Expectations: This is the last week for Federal Reserve officials to speak publicly before entering their pre-meeting blackout period. Markets are actively digesting Fed Chair Kevin Warsh’s hawkish Jackson Hole address, which pushed the market-implied probability of a September Fed rate hike to ~60% and sent short-term Treasury yields higher.
Eurozone Inflation & ECB Quiet Period (Tuesday, Sept 1): Eurozone flash CPI and unemployment data land right before European Central Bank members enter their quiet period ahead of the September 10 meeting.
Central Bank Rate Decisions:
Bank of Canada (Wednesday, Sept 2): Interest rate announcement with expectations focused on whether the BoC pauses or aligns with tight global monetary policy.
Reserve Bank of New Zealand (Wednesday, Sept 2): Rate decision and monetary policy statement.
Commodities & Geopolitics: WTI crude oil prices and FX majors remain heavily sensitive to ongoing Middle East developments and shipping risk around the Strait of Hormuz.
Micro Bottom-Up vs. Macro Top-Down Perspectives
On the earnings side (micro bottom-up), reports from Dell and Broadcom should give traders and investors more insight into the tech sector.
On the macroeconomic side (top-down), focus returns to labor market data, with JOLTS and the ADP employment change acting as leading indicators to the lagging indicator—and the PPV heavyweight for traders—non-farm payrolls (NFP). This will provide corporate companies, investors, and traders with a leading indicator of how the next inflation data print could unfold. In turn, that will offer insight into dollar lending costs set by the Fed (US Central Bank).
With Chairman Kevin Warsh stating last week, "We should not indulge a regime in which market participants are looking primarily to the Fed for their next trade," a key question arises: if Warsh does not give forward guidance for traders, investors, and corporate lenders to position themselves and allocate their level of risk, will economic data provide the sole opportunity to do so? Furthermore, will that absence of guidance create larger surprises relative to analyst expectations and spark heightened intraday market volatility across asset classes?