---
title: "August turmoil replayed? Non-farm payrolls to be revealed on Friday"
type: "News"
locale: "zh-HK"
url: "https://longbridge.com/zh-HK/news/215626067.md"
description: "If the employment data is too strong, investors may reduce their expectations for future monetary easing policies and return to the situation where \"good economic news is bad news for the stock market.\" However, employment data that is significantly weaker than expected may also be seen as a negative signal for the market, potentially leading to a resurgence of recession fears. Therefore, employment data meeting expectations is the best scenario"
datetime: "2024-09-30T13:35:17.000Z"
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  - [en](https://longbridge.com/en/news/215626067.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/215626067.md)
---

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# August turmoil replayed? Non-farm payrolls to be revealed on Friday

The September non-farm data, whether good or bad, is not good news.

On Monday, September 30th, John Authers, former chief market commentator of the Financial Times and Bloomberg columnist, published an article discussing whether the U.S. non-farm data on Friday will once again trigger significant market volatility like in August and early September. Authers stated that **the latest inflation data cannot prevent rate cuts, and the latest unemployment data also cannot support rate cuts.**

Komal Sri-Kumar, President of Sri-Kumar Global Strategies, stated that if the September non-farm data is too strong, it may "scare" the market as it would support the Fed in reducing the rate cut size or delaying it, bringing the market back to the scenario where "good economic news is bad news for the stock market"; however, if the September employment report is very weak, it could lead to a return of recession fears, putting the market back into the scenario where "bad news is bad news."

**Therefore, meeting expectations in employment data is the best scenario.** Jose Torres, economist at Interactive Brokers, stated: For bullish investors, the ideal situation is for the data to be close to expectations, so as not to disrupt the current expectations of monetary easing.

**This Friday, the U.S. Bureau of Labor Statistics will release the September non-farm employment report.** Economists generally expect the September non-farm data to show a robust labor market recovery, providing support for the market's optimistic rate cut expectations. Currently, the market is betting that the probability of a 50 basis point rate cut at the November Fed meeting is over 50%; and according to the Fed's latest dot plot, FOMC members expect only a further 50 basis point cut this year, with 25 basis point cuts at both the November and December meetings.

## **Awkward Situation, Waiting for Non-Farm Breakthrough**

In August and September, macroeconomic data disappointed, and the U.S. stock market had a poor start. In early September, U.S. inflation data was somewhat stubborn, not enough to directly cut rates by 50 basis points. However, the Fed eventually cut rates by 50 basis points. In early August, ISM data and unemployment data seemed to indicate the risk of an economic hard landing.

But the latest data shows that inflation concerns have eased. Last Friday, September 27th, the U.S. Department of Commerce released August PCE inflation data showing that **U.S. inflation continues to improve**: whether excluding food and energy, or using the trimmed mean calculated by the Dallas Fed, **PCE inflation is very close to the 2% target and shows a significant, stable downward trend.** This is good news for the Fed and will not be an obstacle to a 50 basis point rate cut at the November meeting.

**However, since the Fed has clearly stated that it will focus on the labor market, the September non-farm employment data will provide the latest guidance for the Fed's rate cut path this year.** On Thursday, September 26th, data released by the U.S. Department of Labor showed that initial jobless claims in the U.S. for the week ending September 21st fell to near multi-year lows, while continued jobless claims rose slightly, indicating a recovering labor market with reduced layoffs 
**A awkward situation has emerged: while there is no reason for inflation data to stop further rate cuts, there is also no reason for employment data to prompt further rate cuts.**

## The key to the stock market rebound: Will employment data support the expectation of a significant rate cut by the Federal Reserve?

As mentioned above, as of now, the U.S. economy is performing well, inflation is under control, and the job market remains stable. However, this week will see the release of September non-farm payroll data and the unemployment rate. Will these data, like in August and early September, trigger significant market volatility? Authers believes that in the current bullish market sentiment, it is indeed possible.

The key lies in the market's expectations for future rate cuts.

**If employment data is too strong, investors may reduce their expectations for future monetary easing policies and return to the situation where "good economic news is bad news for the stock market."** Komal Sri-Kumar, President of Sri-Kumar Global Strategies, told MarketWatch in a phone interview: "If the employment data is very strong, it will definitely cause panic in the stock market."

**However, employment data that is significantly weaker than expected may also be seen as a negative signal for the market, leading to new concerns about an upcoming recession.** Tom Hainlin, Senior Investment Strategist at a U.S. wealth management firm, said: "If the September employment report is very weak, the situation will turn into 'bad news is bad news.'"

## **Other potential market volatility risks: elections, economic outlook, inflation expectations**

In addition to the September non-farm payroll data, the U.S. elections, differences in economic outlook between the two parties, and consumers' and investors' inflation forecasts all impact the U.S. stock market.

With only five weeks left until the U.S. elections, there are risks of volatility in the market—a comprehensive victory by either party may signal significant policy changes, some of which are favorable to the market, while others are not. For example, if the Republican Party wins, Trump's proposed corporate tax cuts would benefit the market, but tariff proposals would be detrimental to the market.

Let's take a look at the situation of divided government—**since Biden dropped out of the race, the market has been more inclined towards a divided government that is favorable to the market. In a divided government scenario, although the president has the power to unilaterally implement tariff policies, it would still reduce the risk of fiscal overexpansion.**

Currently, the market has not shown too much volatility due to the elections, which may be because the election results are unpredictable, coupled with the shadow of polling failures in 2016 and 2020, making market participants unable to confidently place bets.

**At the same time, there is a significant divergence in the views of the Republican and Democratic parties on the U.S. economy.** Republicans believe that the economy will be worse off by 2022 than when inflation peaks, while Democrats believe the economy has almost recovered to pre-pandemic levels. Surveys show that Republicans tend to have lower levels of wealth than Democrats, which may partially explain the divergence in the two parties' views In addition, consumers believe that inflation in the United States will rise significantly by more than 6% in the next five years, while market participants do not agree and are more inclined to the Democratic Party's view that the economy has almost recovered to pre-pandemic levels

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