US Jobs Report, ISM Data, Eurozone CPI Inflation: Macro Week Ahead
US Jobs Report, ISM Data, Eurozone CPI Inflation: Macro Week Ahead
By:Ilya Spivak
What do stock markets want more – a strong US labor market or Fed interest rate cuts?
- US payrolls data is in focus as stock markets wrestle with rate cut speculation
- ISM surveys will track the Fed tradeoff between US employment and inflation
- The euro is unlikely to get any help from higher CPI as the ECB stays on hold
Stock markets delivered a soggy showing last week, struggling to follow through after an initially positive reaction to this month’s closely watched Federal Reserve policy decision. The bellwether S&P 500 slid 0.4% while the tech-tilted Nasdaq 100 lost 0.6%. Treasury bond yields marched higher alongside the US dollar.
Taken together, this seems to suggest that – upon reflection – traders found themselves disappointed with the US central bank’s insufficiently dovish signaling. With this data cycle’s inflation updates now behind them, this week will give traders a chance to focus on the employment side of the Fed’s dual mandate to speculate on next steps.
Here are the key macro waypoints to consider in the days ahead.
Eurozone inflation data
Price growth in the Eurozone is expected to heat up in September. Consumer prince index (CPI) data is due to show a rise of 2.3% year-on-year, putting inflation at its highest in seven months. The uptick seems unlikely to lead the European Central Bank (ECB) in a more hawkish direction, however.
Food prices have accounted for the lion’s share of inflation in the currency bloc over recent months. In turn, that has helped boost recreation prices. Taken together, these subsectors contributed a hefty 0.89 percentage points (ppt) of Augusts’ 2% headline inflation rate.
The ECB has little agency over global food costs and seems unlikely to embrace a rate hike program, especially while economic activity growth struggles to build momentum. Tellingly, markets have priced in policy standstill through the end of next year. This leaves the euro at the mercy of US dollar that is trying to stage a comeback.
US ISM economic activity surveys
The Institute for Supply Management (ISM) is expected to say that the service sector kept pace in September after growth there hit a six-month high in August. The manufacturing sector is seen contracting for the seventh month straight, but the pace of decline is penciled in at the slowest since March. That would be a slight improvement.
Traders will keep a close eye on the interplay between price growth and employment trends within the underlying data. Manufacturing and service sector firms have reduced staff in tandem over the past three months. Meanwhile, blistering inflation has remained at a rolling boil on the services side, while manufacturing prices have cooled only a bit.
Where things go from here will speak directly to the Fed’s central argument for interest rate cuts: that increasingly loud warning signs for the US labor market demanded action, and that the ephemeral nature of tariff-linked inflation has allowed for that action to proceed. Stock markets may wobble if those assumptions appear less credible.
US employment data
Capping the week will be September’s official US jobs report from the Bureau of Labor Statistics (BLS). It is expected to show a rise of 50,000 to nonfarm payrolls. The unemployment rate is seen holding unchanged at 4.3% for the second month, matching the nearly four-year high reached in August.
Three soggy months on this front alongside a sharp downward adjustment in the BLS’ annual revision seemed critical in triggering Fed stimulus this month. Payrolls growth averaged just 38.3k per month in June, July, and August. Meanwhile, job creation in the 12 months through March 2025 was revised down by a staggering 911,000.
As it stands, the markets have priced in 59 basis points (bps) in Fed rate cuts for 2026, clashing with the Fed’s forecast of a single 25bps reduction. A soft jobs report that endorses traders’ view seems likely to buoy sentiment, cheering Wall Stret and hurting the US dollar. A stronger reading that eats into stimulus bets may have the opposite effect.
Ilya Spivak, tastylive head of global macro, has 15 years of experience in trading strategy, and he specializes in identifying thematic moves in currencies, commodities, interest rates and equities. He hosts Macro Money and co-hosts Overtime, Monday-Thursday. @Ilyaspivak
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