Investors fear US data disruption from looming government shutdown
By Laura Matthews
NEW YORK (Reuters) — Delays of vital economic data releases could trigger financial market volatility if a U.S government shutdown goes ahead this weekend and drags on for weeks, leaving investors to use alternative data sources to determine the economy's trajectory.
Washington is days away from its fourth partial shutdown of the U.S. government in a decade if lawmakers cannot agree on funding levels for the full fiscal year beginning on Oct. 1.
A shutdown would disrupt government services including the publication of major U.S. economic data such as keenly-watched employment and inflation reports that can move equity and bond markets globally.
«If the government data releases are suspended, this will increase volatility and decrease visibility, in a time when forecasting is already difficult,» said Clifton Hill, global macro portfolio manager, at Acadian Asset Management.
«Markets will be 'flying even more blind' and this will increase uncertainty to the Federal Reserve Bank's rate decisions over the next three to six months.»
Hill said that investors would have to make assumptions based on survey and non-government economic data that is available.
Key government data releases due over the next two weeks include jobless claims, unemployment and inflation, which influence monetary policy.
«Markets could get volatile if investors and monetary policy makers cannot get timely data updates such as the latest snapshot on employment and unemployment, especially during this stage of the cycle,» said Jeffrey Roach, chief economist at LPL Financial (NASDAQ:LPLA).
A shutdown may delay the Oct. 6 payroll report and other important releases, Roach added, which could cause the U.S. Federal Reserve to be «more
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