Bloomberg Surveillance TV: October 2nd, 2026

SPEAKER_1 (0:02)

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Jonathan Ferro (0:11)

This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferro, along with Lisa Abramowitz and Annmarie Hordern. Join us each day for insight from the best in markets, economics and geopolitics. From our global headquarters in New York City, we are live on Bloomberg Television weekday mornings from 6 to 9 a.m. Eastern.

Subscribe to the podcast on Apple, Spotify or anywhere else you listen. And as always on the Bloomberg Terminal and the Bloomberg Business App. We begin this hour with stocks rising as yields pull back from 24 year highs. Seema Shah of Principal Asset Management writing for Bond Markets. Today's jobs report could be as much of a test for the Fed as a test for the labor market. Seema joins us now for more. Seema, welcome to the program. Let's just start with base case expectations. What are you looking for at 8.3 Eastern time?

Seema Shah (0:56)

So, we're expecting about a 65K number. We're expecting wage growth to stay pretty stable at about 0.3% and unemployment to stay at 4.1%. So, this is to our minds, this we're expecting a pretty boring report, but boring is exactly what the market wants.

Jonathan Ferro (1:10)

We saw some heat in the PMI last week, Seema. We did not see the same heat in the ISM. This is the question, I think, a key question for Fed officials. Is the economy just strong or is it strengthening? Do you have a bias towards one versus the other right now?

Seema Shah (1:24)

Yeah, we think that the economy is strong. We're not really talking about strengthening.

We, you know, the economy has done incredibly well this year.

And a lot of that has been down to consumer resilience. Of course, we know that the invest, the AI investment story is still there and no question about the strength continuing on that front. From the consumer side, it has had a lot of help, right? With the tax refunds coming at the exact crucial moment. As we get into, you know, approach to 2027, some of those support handles are starting to drift away. And of course, you've got the affordability issues with regards to price pressures, borrowing costs. So that's where we can see a little bit of weakness. But I just want to emphasize that we're not expecting a significant slowdown. This is just a slowing towards trend growth. But I would say that this week, for the first time in a long time, the kind of conversations I've been having has started to center on, are we looking at a kind of a deeper slowdown than certainly what markets have been anticipating until this point? So it does feel like the narrative is shifting a little bit with regards to economic concerns.

Lisa Abramowicz (2:24)

How would you express that as an investor? Let's say we get a disappointing labor market report. Do you buy bonds? Do you sell equities? How do you sort of situate?

Seema Shah (2:34)

It's a really interesting story. So if we were to get a disappointing labor report, when I say a disappointing, I mean a lower number in payrolls, a slowdown in wage growth. Actually, the equity market is going to like that. It's going to feel like, look, as long as things are not terrible from an economic front, we know that the Fed maybe is not going to move as quickly expected. And then you're going to see a bit of a pulldown in bond yields and the equity market starts to do better. But as to your point before, we are seeing some small, very, very early signs within the credit market that there are tensions building. So this is a little bit of a pivot towards some of the safer assets whilst keeping the equity market exposure going just as.

Lisa Abramowicz (3:15)

Michael Hartnett over to Bank of America had a note overnight. He came out and said that he expects people to be jittery around riskier assets until the dollar peaks. We have had the longest streak of strengthening going back to the beginning of 2025 He recommends buying the humiliation and go in and buying bonds. Are you getting to that point of buying the humiliation?

Seema Shah (3:38)

It's going to be impossible to call the top on this. Trying to get the timing perfect is a game. It's not something that we want to do.

We think that, look, if you were to see a continuation in strong growth, price pressure is still very evident. There is potential for bond yields to move a little bit further. Absolutely. But from a technical front and from a positioning front, more specifically, it does feel like we're getting close to the peak from a yield perspective. And certainly, so from our side, this is probably the time that you want to be increasing your fixed income exposure, but importantly be focusing on some of the more quality assets or safe assets within the fixed income space.