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Global markets face volatility this week as they close the third quarter, with investor focus on the September US employment report and potential Federal Reserve rate hikes. Meanwhile, oil prices exceed $108 per barrel due to geopolitical tensions in the Middle East, and trade relations between the US and China remain stagnant despite limited tariff relief.
Sept 28 - Nervy bond markets face another test this week as they navigate the ends of both the month and the third quarter on Wednesday, with the September US employment report following on Friday.
There's been no relief from energy markets ahead of that, with world crude prices back on the rise at over $108 per barrel early on Monday. Oil's latest climb comes after President Trump rejected recent Iranian proposals to reopen the Strait of Hormuz and halt regional fighting. There appears to be little prospect of resolving the seven-month crisis before November's US midterm elections.
The end of a turbulent third quarter for world markets may see some erratic rebalancing of portfolios early in the week, but September payrolls data on Friday and all the monthly labor market updates before then will likely hold the focus. Consensus forecasts are for a jobs gain in September of 84,000. Although down from August's print, that's still well in excess of estimates of the breakeven that would keep the unemployment rate steady at 4.1%.
With about a two-thirds chance of another Fed rate rise next month now priced into futures markets, every Fed speaker is being watched closely, with another stream on the calendar for Monday, including board members Michelle Bowman and Lisa Cook. So far, all the voting Fed policymakers who have spoken since the"unanimous" decision to hike rates this month have chimed with a script that more tightening is likely to be needed.
Any break in that message from senior figures will be market sensitive. Elsewhere, there was little market follow-through from the US-China summit last week, which seemed to disappoint hopes of major new developments in the fraught economic and trade relationship between the two powers. Some tariff relief between them on selected goods did emerge, though the extension of their wider trade truce only runs to January. Meantime, Chinese industrial profit numbers fell in August in the latest data release there.
US nonfarm payrolls are expected to have risen 84,000 this month, keeping the unemployment rate unchanged at just 4.1%, according to Reuters consensus forecasts. August payrolls surprised markets by coming in more than three times estimates at 162,000. That means job gains averaged 71,000 per month in the three months through August, compared to a loss of 9,000 over the same period in 2025.
• Fed's Michelle Bowman and Lisa Cook and Richmond Fed's Thomas Barkin speakWant to receive the Morning Bid in your inbox every weekday morning? Sign up for the newsletter here. You can find ROI on the Reuters website, and you can follow us on LinkedIn and X. Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
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