· Institutional Surveys (Institutional Surveys) and Household Surveys (Household Surveys) are two key employment data in the US that help reveal the state of the economy

· Employment data helps the Federal Reserve determine the effects of its current policies

The financial market, like any effective market, is affected by the relationship between supply and demand for financial securities. There are many supply and demand drivers in the stock market, but the most important and stable external factors include economic data, geopolitical events, and government/agency interventions.

Often, some or all of these factors are superimposed on each other and have an impact on the market at the same time. The emergence of new geopolitical issues may cause economic data to perform significantly below or above expectations, which in turn may prompt the Federal Reserve to continuously adjust its policies to deal with the impact of continuously changing external factors on the market.

Specifically, in terms of economic data, institutional surveys and household surveys are two types of employment data that markets, financial analysts, and traders pay close attention to. Given that the Federal Reserve has begun to cut interest rates, these reports are now receiving more attention than when the market did not hold a policy shift to expectations.

The agency survey, also known as the “Current Employment Statistics Program (Current Employment Statistics Program),” is a monthly survey covering approximately 119,000 companies and institutions across the US. The monthly survey results will reveal industry-level non-farm payroll and employment data, estimate the monthly employment changes of enterprises, and the creation or dissolution of enterprises during this period.

Household surveys, also known as “current population surveys (current population surveys),” aim to sample the labor force population and measure employment trends based on demographic characteristics. Compared to institutional surveys, household surveys cover a wider range of labor data because people such as self-employed workers and agricultural workers are all non-corporate employees. One of the most widely cited data in monthly household surveys is the national unemployment rate.

The Federal Reserve has the “double task” of maintaining a healthy level of inflation and employment, and the labor market is inextricably linked to the latter. The August employment report released on September 6 shows that the labor market is cooling down, but it has not collapsed. The US economy added 142,000 new jobs, falling short of expectations, but it is still at a healthy level.

The market's previous expectation that the unemployment rate would fall in sync with the employment data became a reality: the unemployment rate fell slightly from 4.3% to 4.2%. Although the unemployment rate is still at a historically low level, it has been rising steadily over the past year.

This employment report is an influential piece of data since the Federal Reserve began raising interest rates in 2022, as the job market recently showed some signs of weakness, and the government recently downgraded the institutional survey data for the period April 2023 to March 2024 by 0.818 million. The Federal Reserve's decision to cut interest rates by 0.50% at the September meeting is likely influenced by these factors.

Economic data in line with expectations may convince investors and the Federal Reserve that the economy is still moving towards an ideal “soft landing” scenario. As far as institutional investors are concerned, this kind of data may indicate that the future market is optimistic, and that the bull market is fully supported. For the Federal Reserve, such data may indicate that its policies are working as scheduled.

In the September employment report released recently (10/4), the unemployment rate fell slightly again to 4.1%, while the number of new jobs in the US exceeded expectations. Strongly surveyed by agenciesNon-farm payrolls dataDriven by this, CME's US Treasury options due on Monday soared to a record 0.257 million contracts on the day the data was released.

One way to help market participants manage the risks associated with upcoming data is to buy so-called Rexter combinations, that is, a combination of an off-price put option and an off-price call option. Regardless of whether the price rises or falls, as long as the change exceeds expectations, holding this type of position can obtain the best return; the biggest risk faced by such positions is to lose the net debit amount already paid.

There are countless external factors that influence the market every day; data releases are just one of them.