Global Highlights for This Week: U.S. Government Shutdown Drama Continues, Fed Officials Speak Intensively
Last week, U.S. stocks performed strongly overall, with the three major indices each gaining over 1% cumulatively and setting new historical records. However, signs of weakening momentum emerged during Friday’s trading session.
On that day, the U.S. Senate again rejected temporary funding bills proposed by both parties, ensuring the federal government will remain in “shutdown.” Due to the Labor Department suspending nearly all economic activities, the September nonfarm payrolls report could not be released on Friday.
Events on Capitol Hill will continue to be a focal point for investors. Mark Hackett, chief market strategist at Nationwide, said: “The shutdown and potential reopening… this is capturing the attention of nearly all investors.”
Some investors are concerned that if the U.S. data drought persists for weeks, the Federal Reserve will lack key indicators to guide its decisions, potentially causing confusion about its interest rate path. Moreover, the longer the data drought continues, the more likely it is to drag on economic growth.
Although there are no signs of the federal government “reopening” soon, Fed officials are not taking a break. This week, several senior officials will speak publicly, including Governors Barr, Bowman, and Mester, as well as regional Fed presidents such as Bostic and Kashkari.
On Thursday, pre-market, Fed Chair Powell will deliver opening remarks at a community banking conference hosted by the Board of Governors. Markets will closely watch Powell’s comments on the recent government “shutdown” event.
The previous day, the minutes of the September Fed monetary policy meeting will be released.
Meanwhile, the Nobel Prizes in Physiology or Medicine, Physics, and Chemistry will be announced this week. Last year, several Nobel awards were related to artificial intelligence (AI), reflecting its leading role in current research trends.
Currently, AI has become a driving force behind the sustained rise in U.S. stocks, with many market movements relying on a few AI leaders. Goldman Sachs analysts acknowledged in a report last week that optimism around AI and tech companies continues to push U.S. stocks higher.
At a conference on Friday, Amazon founder Jeff Bezos said he believes the current AI investment boom is a “good bubble”—even if it may burst, its long-term benefits to society will remain significant.
Overview of Key Global Economic Events This Week
Monday: Eurozone October Sentix Investor Confidence Index, Eurozone August Retail Sales (MoM), Nobel Prize in Physiology or Medicine announcement, U.S. September Global Supply Chain Pressure Index
Tuesday: ECB President Lagarde delivers introductory remarks at the European Parliament’s Economic and Monetary Affairs Committee, Nobel Prize in Physics announcement, U.S. August Trade Balance, Atlanta Fed President Bostic speaks on economic outlook, U.S. September NY Fed 1-Year Inflation Expectations, Fed Governor Mester participates in a fireside chat, Minneapolis Fed President Kashkari speaks
Wednesday: EIA releases Short-Term Energy Outlook, ECB President Lagarde speaks, New Zealand Fed announces interest rate decision, Nobel Prize in Chemistry announcement, Fed Governor Barr speaks, U.S. EIA Crude Oil Inventories for the week ending October 3
Thursday: Fed releases monetary policy meeting minutes, Minneapolis Fed President Kashkari speaks, ECB releases September monetary policy meeting minutes, Fed Chair Powell delivers opening remarks at a community banking conference hosted by the Fed Board, Fed Governor Bowman speaks
Friday: Fed Governor Barr and Minneapolis Fed President Kashkari speak at an event, Chicago Fed President Goolsbee delivers opening remarks and moderates a discussion at a community bankers’ seminar, U.S. September University of Michigan Consumer Sentiment Index (Preliminary)/One-Year Inflation Expectations (Preliminary)