Weekly Issue Check: Employment, Employment, Employment, and Employment Report

09/29 Weekly Issue Check: Employment, Employment, Employment, and Employment Report

Many key economic indicators will be released at the beginning of the month, but Friday’s September employment status report is a key event that will determine the volatility of financial markets. The market expects the number of nonfarm employees to have risen by 5.0 million, up from last month’s (220,000). If the figure is significantly above and unemployment falls below 4.3%, expectations for the Fed’s October rate cut will weaken, and the dollar will strengthen, Treasury yields will rise, and the volatility of the stock market will expand. Conversely, the result of a significantly lower employment growth could also increase the downward volatility of the stock market, raising concerns about a recession. However, if the company releases results similar to expectations, it can expect to see more upward volatility in the stock market on expectations that the Fed’s stance to cut insurance will be maintained.

As Fed members such as Chairman Powell have recently mentioned, the U.S. job market is showing an unusual reluctance for companies to hire and fire both. This is because hiring is reduced in preparation for AI development, economic instability, and immigration regulations, and layoffs are minimized to protect competent human resources. As a result, the number of new unemployment claims continues to be low, but the number of long-term unemployed people is increasing rapidly. The Fed is concerned that such a “employment cliff” move could lead to a sudden contraction in the job market if the economy slows down.

Therefore, it is important to note whether the number of job openings in the job market, especially on Tuesday (30th), falls below 7 million, indicating a contraction in labor demand, and the employment index of the ISM Manufacturing Index on Wednesday (1st) and the ISM Service Index on Friday (3rd) are also important. Other details of the consumer confidence index, such as the gap between abundant jobs and difficulty in finding jobs, and the results of the number of mass layoffs in the Challenger report, are also important

In the past, statistically, employment reports tend to show an upward revision of monthly employment numbers as they enter the end of the year (Q4), Morgan Stanley and several other investment firms have noted. This could stem from the failure of the post-pandemic season season season adjustment model to immediately reflect new employment patterns, such as the spread of online shopping and enhanced business activity in preparation for the end-of-year shopping season. As a result, employment figures for July and August are likely to be revised upward in the September report, which will be released on Friday, and if the correction is larger than expected, the market could interpret the fundamentals of the labor market more strongly, affecting expectations of a rate cut and expanding volatility in the financial market

Along with the job market, Fed Chairman Jefferson’s remarks on the economic outlook and monetary policy and other Fed members’ remarks are also important. Additionally, the stock market is expected to increase daily volatility, as the end of the quarter fund’s rebelling and CTA fund’s stock position are close to 100%, reducing additional buying capacity, which could lead to increased volatility in individual stocks due to the supply and demand of options. In addition, the metal market’s supply and demand gap due to China’s long-term closure, Tesla’s volatility due to the announcement of vehicle sales in the third quarter, the federal government shutdown issue, and Trump’s imposition of tariffs on individual industries are also factors that increase stock and industrial volatility

*Issues to Watch by Day of the week
Monday (29th): Quarterly rebalancing
Tuesday (30th): JOLTs, Consumer Confidence Index, Jefferson Remarks
Wednesday (01): South Korea’s import and export statistics, ISM manufacturing index, China long-term closure
Thursday (02): Number of new unemployment claims
Friday (03): Employment Report

*a weekly schedule
09/29 (Monday)
Eurozone: Consumer Confidence Index
What I Said: Waller, Fed Director (Payment), Williams, Bostic
Industry: Chinese group tourists enter visa-free entry
Event: Jefferies Healthcare Services Conference
Companies: Nvidia Attends International Humanoid Robot Conference
Earnings Load: Canaval (CCL)

09/30 (Tue)
Korea: Industrial Production, Retail Sales
China: Manufacturing, Service PMI, Caixin Manufacturing, Service Index
UK: GDP growth rate
US: Consumer Confidence Index, JOLTS
Bank: Australian Monetary Policy Council
Remarks: Jefferson Fed Director (Economy, Monetary Policy), Goolsbee, Governor Logan, ECB President Lagarde
Industry: Electric Vehicle Tax Credit Ends
Politics: US Federal Shutdown
Earnings Load: Paychecks (PAYX)
After Earnings: Nike (NKE)

10/01 (Wednesday)
Korea: Export-Import Trends
Germany: Consumer Price Index
US: ADP Private Employment Report, ISM Manufacturing Index, Construction Expenditure, Q3 Car Sales
Meeting: OPEC+ Meeting
Tariffs: Trump Enforces Furniture, Bathroom Supplies, Large Trucks, Pharmaceutical Tariffs
Closed: China (~8th), Hong Kong
Earnings Load: Conagra Brands (CAG)\

10/02 (Thursday)
Korea: Consumer Price Index
U.S.: Mass layoffs, new jobless claims
Remarks: Governor Logan
Closed: China, India
Earnings Load: Analog Devices (ANGO)

10/03 (Friday)
Korea: Foreign Exchange Reserves
US: ISM Service Index, Employment Report
Remarks: Governor Williams, Fed Director Jefferson (Economy, Monetary Policy), ECB President Lagarde, BoE Governor Bailey
Politics: Japanese Prime Minister’s Election (10/04)
Companies: C3AI Annual Shareholders’ Meeting
Closed: China, Korea (~9th)