World Week Ahead: US jobs, interest rates in focus
By Margreet Dietz
Oct. 2 (BusinessDesk) - With Wall Street at record highs, investors will eye the latest US jobs data as well as comments from a host of Federal Reserve officials set to speak this week to gauge the pace of future interest rate hikes.
Last Friday, a Commerce Department report showed that a key measure of inflation for the Fed proved weaker than economists had expected. Even so Fed Chair Janet Yellen, who is set to speak in St Louis on Wednesday, has clearly signalled the central bank still intends to lift its key interest rate once more this year.
“The Fed appears poised to look through surprises in inflation data over the next few months,” Ellen Zentner, chief US economist at Morgan Stanley in New York, told Reuters.
The hurricanes that struck the US recently are likely to show their impact in the jobs data: the ADP employment report on Wednesday, weekly jobless claims on Thursday and the government's confirm payrolls report on Friday.
“The September employment report (Friday) was probably affected heavily by the disruption caused by Hurricanes Harvey and Irma," Capital Economics economist Paul Ashworth said in a note. “We estimate that payrolls increased by only 100,000, about half of the gain we would have expected in the absence of the hurricanes.”
“However, markets and the Federal Reserve should ignore any obvious signs of hurricane-related weakness,” Ashworth added.
First, other US reports scheduled for release include PMI and ISM manufacturing indices, and construction spending, due today; motor vehicle sales, due Tuesday; PMI services index and ISM non-manufacturing index, due Wednesday; international trade, and factory orders, due Thursday; as well as wholesale trade, due Friday.
Other Fed officials scheduled to deliver speeches this week include Robert Kaplan today, Jerome Powell on Tuesday, James Bullard on Wednesday, Powell, John Williams, Patrick Harker and Esther George on Thursday, as well as Raphael Bostic, Eric Rosengren, William Dudley, Kaplan and Bullard on Friday.
Wall Street gained last week, bolstered by the Trump administration’s tax reform plans, as the Dow Jones Industrial Average rose 0.3 percent, the Standard & Poor’s 500 Index climbed 0.7 percent, while the Nasdaq Composite Index rallied 1.1 percent.
For September, the Dow gained 2.1 percent, the S&P 500 rose 1.9 percent and the Nasdaq advanced 1.1 percent, according to Reuters.
“It really sums up kind of what we saw all month and all quarter, another calm day,” Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina, told Reuters. “This is one of the least volatile Septembers in history, it is kind of a continuation of that real dull trading with a nice upward bias.”
Investors will also eye any further clues on the successor to Yellen, whose four-year term as Fed Chair ends in early February. Last Friday US Treasuries slumped on reports President Donald Trump and Treasury Secretary Steven Mnuchin met with former Fed governor Kevin Warsh to discuss the role of Fed chair.
“I don’t think a Warsh nomination would bring confidence to the markets and would expect equities to sell off if he was announced,” Neil Dutta, head of US economics at Renaissance Macro Research, wrote in a note to clients Friday, Bloomberg reported.
“Normally, the FRB staff assumes the chair knows the ins and outs of monetary economics at least as well as they do,” Dutta also said. “Warsh would not be afforded that assumption. That is a big problem.”
In Europe, the Stoxx 600 Index ended Friday with a 0.5 percent gain from the previous day’s close.