U.S. employment and inflation indicators released all at once…China's retail sales and industrial production also out [New York·Shanghai stock market outlook]

Economic indicators delayed by the shutdown are being released all at once

U.S. employment conditions may be worse than expected

This week (15–19) the New York stock market faces the U.S. nonfarm payroll report, the consumer price index (CPI), and retail sales — all of which were delayed by the U.S. federal government shutdown.

According to FactSet, the market expects November nonfarm payrolls to have increased by only 40,000. This is much lower than the 119,000 increase recorded in the September employment report, which was the first released after the shutdown was lifted. Furthermore, alternative indicators that investors referred to during the data gap suggest that the employment situation may be worse than expected.

Jerome Powell, chair of the U.S. Federal Reserve (Fed), said at a recent Federal Open Market Committee (FOMC) press conference that recent months' employment may actually have declined due to a "systematic overcount," and he mentioned the possibility that upcoming employment data could be revised sharply downward.

Concerns about inflation are also reemerging. After last week's FOMC meeting, Wall Street views the rise in the U.S. 30-year Treasury yield as reflecting inflation risk. As the Fed suppresses short-term yields through reserve management purchases (RMP), medium- to long-term yields have been popping up like a balloon. Based on FactSet, November CPI is expected to have risen 3.1% year on year.

There are no special events related to technology stocks, but attention is on whether the year-end Santa rally will begin. Jay Woods, chief market strategist at Freedom Capital Markets, said, "Money is flowing out of tech stocks, and investors are not providing strong upward momentum to the market, but are moving into defensive sectors," adding, "Defensive sectors will support the market until tech stocks regain direction and lift the market."

The key economic indicators coming out one after another this week could be another factor that sets the market's direction.

The Shanghai market is also awaiting important macroeconomic data. With expectations for Fed rate cuts weakening and U.S.-China trade tensions remaining uncertain, key domestic Chinese indicators such as retail sales, industrial production, and fixed-asset investment are expected to be major variables that influence market sentiment.

New York=Shin-young Park, correspondent nyusos@hankyung.com