Inside Markets — Near-Term Risk

A building backlog of government data could present a potential near-term risk for equity markets as the shutdown-induced calm could abruptly end once the data is released. The September Jobs report (supposed to be out last Friday) is the most significant data that’s been postponed followed by weekly jobless claims (supposed to be today). The calm didn’t start with the shutdown, but it may have helped with realized equity volatility now at YTD lows. And the low-volatility trending market has resulted in systematic strategies won’t unwind positioning until there’s a spike in volatility, which makes a data-induced volatility shock the single biggest near-term risk.