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The week ahead is a pivotal one for market participants seeking some clarity on US growth and the likelihood of another Fed rate cut. Now that the longest-ever government shutdown is over, investors will finally get a look at the September employment report. While stale at this point, the report should provide some insight into labor market conditions.
A flurry of public speaking events by Fed officials will reveal whether they’re more concerned about employment or inflation. They include: Vice Chair Philip Jefferson (Mon, Fri) and Governor Christopher Waller (Mon) discussing the economic outlook and monetary policy; Governor Michael Barr (Tue, Fri) on bank supervision; Governor Stephen Miran on the Fed’s balance sheet (Wed, Thu); and Governor Lisa Cook on financial stability (Thu). The minutes from the October Fed meeting (Wed) will also be closely scrutinized.
In the absence of most government data, economists will dissect corporate earnings, particularly those of companies seen as microcosms of their industries. Home Depot (NYSE:HD), Target (NYSE:TGT), and Walmart (NYSE:WMT) will shed light on consumer spending. Nvidia (NASDAQ:NVDA) will provide insights into whether the AI boom is rational.
Here’s a look at data releases that might influence the odds of a Fed rate cut on December 10:
1. Employment
We expect a 40,000 increase in private industry payroll employment (Thu). Such a gain is consistent with the view that the "breakeven" for employment is now 30,000-50,000. The September jobs report is expected to omit the unemployment rate.
During a government shutdown, many federal employees are furloughed without pay. Significantly, payroll employment counts only those who received pay during the survey reference week. Furloughed workers who did not receive pay are excluded from payroll employment for that month, even though they remain employed in a legal sense.
2. Fed business surveys
The week ahead will see the New York Fed (Mon), Philadelphia Fed (Thu), and Kansas City Fed (Thu) releasing regional business surveys that are helping to fill in some blanks in vital macroeconomic data left by the shutdown.
3. Existing home sales
October’s existing home sales (Thu) probably remained weak (chart).
4. Consumer sentiment
The final November reading from the University of Michigan Consumer Sentiment Index (Fri) should confirm the weak preliminary reading of 50.3 (chart). We don’t have much confidence in this consumer confidence measure. It has been too pessimistic for too long.
