Skip to main content

Key U.S. jobs numbers on Friday and an OPEC+ meeting on Monday to review oil output as crude prices top $80 dollars a barrel are top of the agenda for markets as 2021 heads into the homestretch following a bumpy Q3 ride.

Here are the five stories likely to dominate the thinking of investors and traders in the coming week:

‘DECENT JOBS’

An auto worker takes a picture of the first Chevrolet Cruze compact sedan to come off the assembly line at a ceremony inside the GM factory in Lordstown, Ohio on Sept. 8, 2010.The Associated Press

In September, the U.S. Fed said trimming monthly bond purchases could be warranted “soon”; Chair Jerome Powell noted it’ll take one more “decent” jobs report to set the wheels in motion – not a “super-strong” one, just one that’s “reasonably good.”

Will Friday’s September non-farm numbers – the last official jobs report before the Fed’s November meeting – do the trick?

A Reuters poll expects 500,000 jobs were added after August’s massive miss. The Fed’s US$120-billion-a-month government bond buying helped the S&P 500 double from March, 2020, lows. But tapering and rate hike prospects have lifted U.S. Treasury yields and contributed to the S&P’s 4-per-cent drop in September.

Stronger-than-expected numbers might fuel fears the Fed could wind down easy-money policies faster than anticipated, potentially causing more market turbulence.

RATES DOWN UNDER

Two people walk towards the entrance of the Reserve Bank of New Zealand in Wellington, March 22, 2016.Rebecca Howard/Reuters

Rates decisions are due in Australia and New Zealand – two countries separated geographically only by the Tasman Sea but worlds apart on monetary policy.

The Reserve Bank of New Zealand looks set to pull the trigger on Wednesday, with markets all but certain of a quarter point increase in the key rate to 0.5 per cent. Governor Adrian Orr and crew were ready to become the first in the developed world to hike in August, but a COVID outbreak coinciding with the policy meeting scuppered those plans, leaving the Norges Bank to take the honours.

Australia’s Reserve Bank meets on Tuesday and sits at the other end of the hawk-dove spectrum. Despite a red-hot housing market, Governor Philip Lowe threw cold water on markets recently, saying he found it “difficult to understand why rate rises are being priced in next year or early 2023.”

WINTER OF DISCONTENT

Traders work on the trading floor of Barclays Bank at Canary Wharf in London, England, Dec. 7, 2018.SIMON DAWSON/Reuters

Power cuts in China, queues at fuel pumps in Britain, soaring energy prices everywhere.

Headlines resonate with the 1970s – and nowhere more so than in Britain, where the army will help to alleviate a fuel shortage that has led to gaps on supermarket shelves and fights at gas stations. The end of a COVID-19 jobs support scheme means more uncertainty.

For some, a 1970s-style “winter of discontent,” when Britain’s economy was brought to it knees by strikes and power cuts, is coming. But Britain’s not alone. China’s power cuts have crippled industrial output, European consumers face higher winter fuel bills as gas prices soar.

Any signs that the pressures on supply chains, labour shortages and energy prices are abating will bring relief, especially for battered sterling.

The International Monetary Fund’s take on inflation on Wednesday could shed light on whether rampant price pressures akin to the 1970s are taking hold.

PUMP IT UP

The sun sets behind an idle pump jack near Karnes City on April 8, 2020.Eric Gay/The Associated Press

When ministers from OPEC+ – the Organization of Petroleum Exporting Countries and allies led by Russia – meet on Monday to review output policy they face oil prices at three-year highs above US$80 a barrel and consumer pressure for more supply.

Until recently, sources expected the group to stick to the existing plan agreed in July and boost output by 400,000 barrels per day (bpd) a month to phase out 5.8 million bpd in cuts.

But with prices boosted by unplanned U.S. outages and a strong demand recovery after the pandemic, that thinking might be shifting: OPEC+ sources said adding more oil was being looked at as a scenario.

The White House, which raised concerns about high prices, said it was in communication with OPEC and looking at how to address the cost of oil.

BUMPY HOMESTRETCH

People wearing face masks walk past a bank's electronic board showing the Hong Kong share index in Hong Kong on Sept. 7.Kin Cheung/The Associated Press

It’s been quite a ride over the past three months: Chinese markets suffered some of their heaviest falls ever, energy prices spiralled, shipping and commodity costs soared and the clearest signs yet have emerged that central banks are starting to turn off the money taps.

The shakeout has led to the first quarter of losses for world stocks since COVID-19 began to take its toll early last year, bonds have had a shaky September amid taper talk, and the safe-haven dollar is gunning for its strongest year since 2015.

Analysts predict a bumpy ride ahead with markets pricing the end of the “Goldilocks” scenario – when growth and inflation are neither too high nor too low. Time for investors to be aware of the bears.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

This content appears as provided to The Globe by the originating wire service. It has not been edited by Globe staff.

Report an error