Picture this Global markets getting ready for the new week. With key economic indicators and important political developments headed to greatly affect investor sentiment, one cautious optimism is expecting calm moats. On Tuesday, the U.S. Bureau of Labor Statistics (BLS) will release its preliminary annual benchmark revision to non-farm payroll (NFP) data. Economists imagine it will be the first to show a lower revision of about 400,000 jobs. If finalized, this revision will shake up employment data for the full year of April 2024 through March 2025. It has the potential to drastically shape economic predictions.
On Monday, China’s exports data will be out. This data will provide essential transparency into the overall state of the world’s second-largest economy. And investors are understandably laser-focused on these numbers. They’re especially watchful, too, given lingering trade threats and current global supply chain upheaval.
In the U.S., core inflation has risen to just 2.3%. At the same time, the flash estimate of Eurozone headline inflation fell to a shiny 2.1% in August. These figures will be significant as they set the stage for important rewrites of discussions about monetary policy. Look for the Producer Price Index (PPI) on Wednesday of this week. Together, these new data could offer some very helpful clues as to what’s going on with inflation.
Later in the week, all eyes will be on consumer sentiment. On Friday, the University of Michigan will release their preliminary September consumer sentiment survey. This survey has long been considered a key barometer of economic health and can directly affect consumer spending behavior.
Besides these encouraging economic indicators, political developments across the Atlantic are no less remarkable. French Prime Minister François Bayrou to no-confidence vote on Monday. This important ruling could set in motion dramatic political shifts in France. Should Bayrou lose that vote, it will place President Emmanuel Macron in a difficult dilemma. The first, requiring Mr. Sunak to install a new eastern European premier, or second calling for a snap election, both of which could upend European stability and policy trajectory.
Across the Channel, our other thriving democracy, the political tectonics are still shifting in the United Kingdom, with Prime Minister Keir Starmer at the helm. Chancellor Rachel Reeves, perhaps the most visible face of the new fiscal conservatism, embodies this new spirit even further within Starmer’s Labour Party. Observers are particularly attuned to how this dynamic from within the party will shape economic policies and the party’s long-term position on major issues like immigration.
On the employment front, during just one year of the pandemic, the U.S. experienced a complete reversal of fortune. The unemployment rate fell to 6.2% in July from 6.3% in June. The upward trend points to a robust, tightening labor market. Possible changes to NFP data could put a pin in that optimism.
Furthermore, inflation in the Euro area remains well anchored around the European Central Bank’s (ECB) target. The reversal of this dangerous trend is promising evidence that our nation’s economic recovery efforts are working. Follow as these new indicators and exciting political developments continue to unfold. These will no doubt shape market responses and push policy makers on all sides in the weeks ahead.