Nonfarm Payrolls

With a massive 50 basis point rate decrease earlier this month, the Fed began its cycle of rate cuts, but investors are still focused on the labour market to determine how quickly the central bank will need to lower rates in the months ahead.

The October nonfarm payrolls data, which the Labour Department will issue on Friday, is anticipated to show that the US economy gained 144,000 jobs.

Investors are eager to see if the employment report will live up to the predictions of a "soft landing," where the Fed controls inflation without significantly slowing down growth.

A recession may once again be feared in the event of weaker-than-anticipated figures, while concerns about the Fed's potential decision to hold off on cutting interest rates in order to prevent a spike in inflation may arise from unexpectedly robust employment growth.

Eurozone

Tuesday's flash September inflation data from the eurozone will be eagerly monitored as officials at the European Central Bank consider whether to lower interest rates once again in October.

Due to lower energy costs, they predict that the annual rate of inflation will be 1.9%, falling short of the ECB's 2% objective for the first time since June 2021. However, they also predict that inflation will climb again in the last few months of the year.

Due to the unexpected September contraction in euro zone business activity, investors are now pricing in a little more than 50% possibility of a 25 basis-point October rate decrease, something they believed was implausible only last week. This is fuelling concerns that the ECB is falling behind.

Powell Speech

Jerome Powell, the chair of the Federal Reserve, will address the National Association for Business Economics on Monday on the state of the economy.

In a note dated Friday, Deutsche Bank analysts stated that they anticipate Powell's words to mostly mirror those from his post-meeting press conference, in which he defended the significant rate decrease by citing the increased confidence in inflation and the evident shift in downside risks, especially with regard to the labour market.

Prior to the employment report on Friday, A comprehensive picture of the status of the labour market will be provided by the August JOLTS report on Tuesday and the private sector hiring statistics on Wednesday from ADP.

Fourth Quarter begins

After a tumultuous few months for the markets, the fourth quarter officially begins on Tuesday.

August was a tumultuous month, with the unwinding of the yen carry trade occurring nearly simultaneously with the collapse of the Mag 7 tech bulls and a resurgence of recession worries following a US employment data that was lower than anticipated.

While stocks have subsequently rebounded to new highs, the yen is poised to have its greatest quarterly performance since the global financial crisis of 2008, oil and benchmark global borrowing costs are both down about 15%, and China is turning on the stimulus taps.

There will probably be more volatility in store because November's US election between Donald Trump and Kamala Harris will dominate the last quarter.

(Sources: investing.com, reuters.com)