US Markets Edge Up Ahead of Potential Shutdown – S&P up 0.4%
US stock markets pushed higher again in trading yesterday despite the potential for a US government shutdown in the coming hours. There is no sign of an end to the standoff in Washington, and a shutdown would lead to key economic data releases scheduled for the coming days being delayed. The Dow rose 0.18% to 46,397, the S&P added 0.41% to 6,688, and the Nasdaq gained 0.31% to 22,660. The dollar drifted lower, with the DXY down 0.11% to 97.79, and treasury yields were mixed — the 2-year down 1.3 basis points to 3.608%, while the 10-year rose 1.2 basis points to 4.150%. Oil prices fell again as traders continued to factor in increased output in the coming months; Brent dropped 1.49% to $66.09, and WTI fell 1.70% to $62.37. Gold continued its relentless push higher, adding 0.66% on the day to close at $3,858.96, up over 11% on the month.
US Jobs Numbers in Focus This Week
US job data is firmly in focus this week, and traders are preparing for some big moves in markets if we see data coming in off expectations. There is still the chance that a government shutdown could stop the numbers from coming out, but most market participants are expecting a last-minute fix to that issue. JOLTS Job Openings numbers have already been released, and they came in largely on expectations. However, this evening we have the ADP Non-Farms data, which is a traditional forward indicator to Friday’s NFP release, and if we see a print ±15k away from the expected 52k, then we are likely to see a strong reaction from the market. On Thursday we have the usual Weekly Unemployment Claims numbers (exp 225k), but the highlight of the week will be the Non-Farm Payroll (exp 53k), Unemployment Rate (exp 4.3%), and Average Hourly Earnings (exp +0.3% m/m). Traders are expecting to see big moves on the release, especially if we see anything stronger than expected, which could pull back expectations of a Fed rate cut at the next meeting in a few weeks.
Another Big Calendar Day Ahead for Traders
It is another big calendar day ahead for traders that should keep market volatility high. Key inflation numbers are due out in Europe again, and more US data is on the cards in addition to a potential US government shutdown, which could rock financial markets. There is little on the cards in the Asian session today, and with Chinese markets shut for the National Day holiday, traders are expecting quieter trading conditions to kick off the day. However, that is set to change once London opens. The EU CPI Flash Estimate (exp 2.2% y/y) and Core CPI Flash Estimate (exp 2.3% y/y) are out early in the session, and traders are expecting moves in the Euro around the event. More jobs numbers are due out in the US once New York opens; the ADP Non-Farm Employment Change is expected to show a 52k increase for September, and volatility is expected as this is a traditional frontrunner for Friday’s big data. ISM Manufacturing PMI (exp 49.0) and ISM Manufacturing Prices (exp 62.7) numbers are also due out, along with the Weekly US Crude Oil Inventory update (1.5 mio barrels).
