Speakers:
Brian Pietrangelo, Managing Director of Investment Strategy
George Mateyo, Chief Investment Officer
Rajeev Sharma, Head of Fixed Income
00:54 – We review the key economic data and market activity from the past week, including the Job Openings and Labor Turnover Survey (JOLTS) report, the September ADP National Employment Report showing a significant decline in private sector employment, and the Institute for Supply Management (ISM) manufacturing and services PMI reports.
02:45 – The current government shutdown prevented the release of data on weekly initial unemployment claims as well as reports from the Bureau of Labor Statistics around new nonfarm payrolls and the unemployment rate.
03:23 – One side effect of the shutdown is that the integrity of the data that we did receive may be less reliable. However, the overall labor market is in a "low firing, low hiring" environment, with pockets of strength in consumer spending and AI infrastructure investment.
05:36 – We discuss the history of government shutdowns and how the lengthier examples in recent years may be due to increasing partisanship, and what short- and long-term effects a shutdown may have on the labor force, the markets and the economy.
09:39 – Treasuries rallied as investors sought safe-haven assets after the shutdown took effect. Attention then turned to the Fed to see whether their recently begun rate-cutting campaign will continue, as is expected at the Federal Open Market Committee meeting later this month.
14:43 – Despite a year of atypical trends and behavior, this shutdown is expected to go as most past shutdowns have: volatility might jostle the equities and bond markets in the short term, but after the shutdown ends and the temperature goes back down, the markets tend to rebound and resolve at higher levels than prior to the shutdown.
Additional Resources
Read: Key Questions: How Does AI Impact Corporate Companies and Fixed-Income Investors?
Key Questions | Key Private Bank