Awaiting U.S. Employment Situation Report and Finding Some Relief from Lower Oil Price
October 2, 2026
The prices of West Intermediate crude and Brent oil fell overnight by 3.8% and 2.4% in response to France’s proposed release of some strategic oil reserves. This attempt to supplement available global supply is something that the Trump administration has been asking European governments to do. A better flow of traffic through the key Strait of Hormuz has also fostered a better balance in global energy.
U.S. September employment figures from the Labor Department, due at 12:30 GMT (08:30 EDT) headline an otherwise light calendar of data reports this Friday. Analysts expect an unchanged 4.1% unemployment rate, a smaller increase of 85-90 thousand jobs after August’s surprisingly buoyant gain of 162k, and around a 3.2% year-on-year rise in U.S. average hourly earnings.
Chinese markets are now closed for about a week, commemorating the Communist government’s founding 77 years ago.
The dollar fell overnight by 0.7% versus the Korean won, 0.3% against the Indonesian rupiah, Japanese yen and Swiss franc and 0.1% relative to sterling and the New Zealand and Australian currencies. The greenback also ticked 0.1% higher relative to the loonie and euro.
In contrast to stock market losses overnight of 0.9% in Japan and New Zealand, European share prices and pre-open U.S. equity futures are higher. The German DAX (+1.1%) so far leads the gains in major European centers, while the four main U.S. barometers are up by 0.5-0.7% at the moment.
Gold and silver prices are only marginally higher, while Bitcoin is sporting a 1.7% advance so far today.
Ten-year sovereign debt yields have fallen more sharply in Germany (-8 basis points) and Spain, Switzerland and Great Britain (each down six bps) than in the United States (just a single basis point).
The cases for sooner interest rate hikes in Japan and Euroland were buttressed by today’s consumer price releases.
- Tokyo CPI data for September, a leading indicator of the national figures due in 3 weeks, yielded 10-month highs in overall inflation (2.7% after 1.9% in August) and core inflation (2.9% versus 1.9%) and a 13-month high in inflation that excludes energy as well as fresh food (2.7% following 1.8%).
- Preliminary euro area figures reveal a three-year high in Euroland September consumer price inflation of 3.8%. That’s up from 3.2% in August and a cyclical low of 1.7% touched two years earlier in September 2024. The 12-month energy rise jumped to 18.8% from 14.3%, while core inflation rose 0.1 percentage point to an above-target 2.5%.
- The four largest Euroland economies had September inflation readings of 5.0% in Spain, 4.5% in Italy, 3.4% in France and 3.2% in Germany, each well above their prior month’s figures.
The monthly world food price index rose further last month to a 41-month high.
Romanian producer price inflation climbed anew by three percentage points to 11.8% in August, not far from July’s 34-month high of 13.1%. Georgian consumer price inflation stayed at 5.6% in September, marking the sixth straight pace of 5.5% or more. Croatian CPI inflation rose a half percentage point to a 4-month high of 4.7% in September.
Postscript: U.S. labor market data were significantly softer than forecaster expectations. Only a net 29k nonfarm payroll jobs were created, and estimated job growth for July-August got revised down a combined 60k. The level of jobs was therefore 121k below what they assumed. Unemployment to did not print at 4.1% for a third consecutive month as was projected, but such only edged up to 4.2% and thus remained in the low and narrow corridor of the previous six months. Average hourly earnings, which had been projected to rise 03% monthly and 3.2% year-on-year, grew 0.1% on month and posted the smallest 12-month increase (3.0%) in 64 months.
Markets are concluded that the employment situation figures tip the balance more decidedly against a federal reserve rate hike when the FOMC meets at the end of 2026. That remains to be seen. The Fed’s priority is inflation, not employment, and the reality of the labor market — little hiring but also little firing amid historically low unemployment — is not crying out for a major rethink. Compared to when the data were reported a little over an hour ago, the 30-year Treasury yield is unchanged, the 10-year yield is 3 basis points lower, and the 2-year has slipped just a basis point on balance. The dollar has dipped 0.1% against the yen and euro and in weighted terms as measured by the DXY index. The biggest market reaction has been a larger rebound in equities after the opening bell than futures had been suggesting.
As an historic benchmark, monthly non-farm payroll growth during the first Trump administration was negative 58k but +148k a month if the pandemic year of 2020 is omitted. Average employment growth in Biden’s single four-year term was 321k per month. In the 20 months of the second Trump administration thus far, jobs climbed at a sub-standard but at least positive 39k per month.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Euroland CPI, French proposal to release some strategic oil reserves, Tokyo CPI, U.S. labor market data and reaction
ShareThis
