An unprecedented 'data vacuum' is coming??
If the U.S. government cannot reach a budget agreement by September 30, a 'data blackout' affecting global markets may soon begin. Key points are as follows:
What happened?
The U.S. federal government may 'shut down' after this Tuesday. This means that core data departments, such as the Bureau of Labor Statistics (BLS), will suspend operations.
Direct impact: Major economic data will collectively 'disappear'
The September non-farm payroll report on October 3: Likely to be delayed.
Upcoming key data such as CPI (inflation) and retail sales: All face a risk of delay.
Why does this matter?
The Federal Reserve is 'blind': The Federal Reserve is relying on data to decide whether to cut interest rates next. Without non-farm payroll and CPI data as 'eyes', they will be 'flying blindly in the fog' (in the words of economists).
Increased market volatility: Without official 'gold standard' data, the market will rely more on third-party data such as ADP employment, but these data are generally considered less comprehensive than government data, which may lead to misjudgment and confusion.
Policy deadlock: In the absence of reliable data support, it will be 'even more difficult' for the already cautious officials within the Federal Reserve to vote in favor of another rate cut.
Will history repeat itself?
During the government shutdown in 2013, non-farm payroll and CPI data were indeed delayed.
If this happens again, it will create an unprecedented 'data vacuum' during a sensitive period for the global economy.
In short: Global investors and decision-makers may soon face a market without official non-farm payroll and CPI guidance. Be prepared for more uncertainty and decisions based on 'feelings'.
