3 Things You Need to Know This Week | US Jobs, Global Inflation, Midterm Miracle

Transcript

Hello, and welcome to 3 Things You Need to Know This Week.

This regular series helps you cut through the financial headlines and focus on what really matters for markets.

For more market insights, subscribe to our YouTube channel or visit FisherInvestments.com.

And with that—here are three things you need to know this week.

First, an update on US jobs reports.

On Friday, we’ll get a fresh look at the state of the US labor market with the release of September’s jobs report. This comes on the heels of August’s readings, which saw non-farm payrolls rise by 162,000 jobs and unemployment remain at 4.1%. That marks six consecutive months of job growth while unemployment trended downwards.

This week, headlines will likely focus on how September’s employment data may influence upcoming Fed decisions, particularly since the Fed just raised rates at its last meeting. Fed officials may interpret a strong jobs report as evidence they could continue raising rates if they view it as necessary to fight inflation.

We believe monetary policy errors are worth watching out for, but incremental rate cuts or hikes aren’t make-or-break for markets either way.

Overall, jobs data point to what stocks have been telling us all along—the US economy is much healthier than consumer fears indicate. Consumers may be feeling gloomy, but they are still spending and companies are still having to hire to keep up with the demand.

For investors, it’s important to remember whether the latest jobs numbers exceed expectations or fall short, labor data reflects what’s already happened.

This week brings two key inflation updates for investors. On Wednesday, the U.S. Bureau of Economic Analysis will release August’s reading of the Personal Consumption Expenditures price Index, or PCE. On Friday, the eurozone will release its initial estimate of September inflation. Together, the data should offer another look at how inflation is evolving on both sides of the Atlantic.

July PCE rose 3.7 percent year over year, which matched June’s reading and is down from May’s 4.1 percent. Core PCE inflation, which strips out energy and food prices, stayed at 3.3 percent, which also matched June’s reading and was down from May’s 3.4 percent. In the eurozone, August inflation rose 3.2 percent year over year, which matches the recent high-water mark set back in May.

Energy prices remain an important source of inflation uncertainty, particularly as further escalation of the conflict in the Middle East could rattle oil prices again. But markets have increasingly adapted to disruptions in Gulf energy supplies. We believe this is why we have seen a familiar pattern this year with spikes above 100 dollars per barrel being short lived.

And as we've highlighted recently in MarketMinder, oil is nowhere near the historic highs seen in 2008, when Brent crude reached roughly 144 dollars per barrel, or the more recent 2022 peak of about 138 dollars per barrel. And while diesel prices have recently reached nominal record highs, we believe history suggests that elevated diesel and oil prices alone will not derail economic growth.

As for high energy costs triggering sustained high inflation, the reality is that businesses often lack the ability to pass rising fuel costs through to consumers on a broad scale, which limits the economywide impact. Importantly, when adjusted for inflation, oil and diesel prices remain below prior peaks, meaning the real burden on businesses and consumers is less severe than headline prices suggest.

For long-term investors, staying disciplined and focused on broader economic trends, rather than reacting to each new data release, remains a time-tested approach to reaching your long-term financial goals.

Finally, the Midterm Miracle.

With the fourth quarter set to begin at the end of the week, the 2026 US midterm elections are coming into focus. With just over a month to go, many of you are likely seeing an increase in political ads and sensationalized claims from candidates.

This is typical of most elections, but we think it’s important for investors to focus on the tangibles. No matter the outcome, midterms usually set the stage for what we call the “Midterm Miracle.” This is the nine-month period starting in the fourth quarter of the midterm year and extending through the first two quarters of the following year. During this time frame US stocks rise about 90 percent of the time.

Markets thrive on stability, and midterms usually provide that in the form of a gridlocked government. That might sound counterintuitive but bear in mind we said “stability” not “harmony.” When Congress and the White House are controlled by different parties, sweeping policy changes become much harder to pass.

We understand that legislative gridlock can be incredibly frustrating for many. However, from an investment perspective, it reduces the risk of disruptive policy changes, and markets tend to reward that predictability. In the case of the 2026 midterms, we expect this trend to continue.

We recommend investors not to let the noise of a contentious election season drive short-term investment decisions. Political uncertainty is a normal part of markets, not a reason to retreat. History shows staying invested through election cycles rather than trying to time them is often the best course of action.

And that’s it for this episode of 3 Things You Need to Know This Week.

For more of our market views, check out This Week in Review, released every Friday, or visit FisherInvestments.com.

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