Europe was down in early trading Friday, most notably London’s FTSE 100 and Madrid’s IBEX 35, which dropped by more than 1% apiece. Germany’s DAX also dropped 0.79%. In Asia, Japan’s Nikkei 225 fell 1.77% at the end of the week, while the Shanghai Stock Exchange dropped 0.97% and Hong Kong’s Hang Seng Index fell 1.85%. South Korea’s KOSPI lost an eye-watering 3.81% as foreigners pulled their money out of the country.
The shift has come down to increasingly hawkish chatter from members of the FOMC, who are unlikely to have a clear picture of the economy come December 9. That’s because the White House has already begun signalling that the data collected during the government shutdown is unlikely to be shared in full.
Yesterday, White House economic advisor Kevin Hassett had more bad news: “The household survey wasn’t conducted in October, so we’re going to get half the employment report. We’ll get the jobs part, but we won’t get the unemployment rate.”
While the information offers some insight, economists have warned throughout the government shutdown that private data is something of a keyhole-view on the economy as opposed to the expansive outlook necessary for the Fed and for investors.
She added that data from consumer brands like DoorDash also won’t hold data on other critical consumer expenses like medical care or housing inflation, and “don’t have a long track record of providing reliable data” akin to federal agencies.
Meanwhile, Thierry Wizman, global FX and rates strategist at Macquarie Group, said he hopes there will soon be “an explanation for how, when, and if data ‘fill-ins’ will be released.” He added: “If one data series may need to be prioritized, however, it is likely to be CPI, since it figures prominently in cost-of-living adjustments (COLAs) used to pay some workers and some benefit recipients.”
As such, he added in the note yesterday: “We think that it is possible that Powell is forced into a compromise by which the Fed either (1) stays on hold in December, or (2) if it does cut, is obligated subsequently to signal that the rate cutting cycle may be over.”
Here’s a snapshot of the markets ahead of the opening bell in New York this morning:
