NEW YORK — Wall Street is preparing for disruption to economic data if a looming US government shutdown goes ahead, which could cause investors to rely more on alternative data or take on more defensive positions as they anticipate volatility in asset prices.
The US Labor Department said on Monday that economic data releases would pause in a government shutdown, amplifying investor concerns that Friday’s monthly employment report would not be published as scheduled. Such a delay to the closely watched report could cause confusion for investors, including how to assess the Federal Reserve’s upcoming interest rate decisions.
“A shutdown is an expected event…like the slow car crash that we’re all watching happen,” said Callie Cox, chief market strategist at Ritholtz Wealth Management. “There are ways to hedge this and I’m sure affected investors are already thinking about that.”
The Fed relies on a range of data including regular government releases to make monetary policy decisions as it seeks to balance its key economic goals of price stability and maximum employment. Markets are pricing in a quarter-point rate cut by the Federal Reserve at its Oct 28-29 meeting. The central bank made such a cut earlier in September following weak employment reports.
