Kiwoom: "Uncertainty in U.S. Economic Indicators Remains After Shutdown... Volatility Expected Until December FOMC"

Kiwoom Securities stated on November 14 that even after the U.S. federal government shutdown (temporary suspension of operations) is lifted, uncertainties surrounding economic indicators and monetary policy may persist. The company emphasized the need for caution regarding volatility until the Federal Open Market Committee (FOMC) meeting in December.

Yumi Kim, a researcher at Kiwoom Securities, highlighted these points in the report "Weekly Macro: What Should We Watch?" released on the same day. She mentioned the gap in U.S. economic data and the uncertainty of the Federal Reserve's monetary policy. Kim explained, "As the shutdown drags on, the collection of some economic indicators is delayed or data gaps occur, making it difficult to accurately assess the current economic situation." She added, "Additionally, the fact that Federal Reserve officials are expressing divergent views on whether to cut rates in December is also contributing to monetary policy uncertainty."

Currently, there is speculation that the U.S. September employment report, which was originally scheduled to be released in early October, may be published next week. However, local reports indicate that the October employment report may be released without the unemployment rate due to delays in household survey collection. Kim pointed out, "For the time being, a decline in the reliability of major indicators seems inevitable." Nevertheless, she said, "The September employment report will be an important indicator for gauging labor market trends. If nonfarm payroll growth slows, expectations for a rate cut in December could rise again."

Kim assessed, "Since the Federal Reserve's rate cuts have largely been a preemptive response to downside risks in the labor market, if demand continues to weaken, an accommodative monetary policy stance remains valid." However, she cautioned, "Until the December FOMC, the probability of a rate cut could fluctuate frequently depending on economic indicators and statements from Federal Reserve officials. Accordingly, volatility in major financial prices could also increase, so vigilance is necessary."

Next week, key releases include Japan's third-quarter GDP (November 17), U.S. October industrial production (November 18), U.S. October housing starts (November 19), Eurozone October Consumer Price Index (CPI, November 19), U.S. FOMC minutes (November 20), Korea's October Producer Price Index (PPI, November 20), and the U.S. November S&P Manufacturing and Services Purchasing Managers' Index (PMI, preliminary, November 21). Public remarks from Federal Reserve officials are also scheduled, including New York Fed President John Williams, Minneapolis Fed President Neel Kashkari, Cleveland Fed President Beth Hammack, Chicago Fed President Austan Goolsbee, and Dallas Fed President Lorie Logan.