Wait, Wasn't the Bank of Japan to Blame After All? … The Bigger Factor Behind Reiwa's Black Monday Than the “Ueda Shock”

The U.S. employment report is regarded as the most important economic indicator in global financial markets, and understanding the difference between the establishment survey and the household survey is considered essential to interpreting its market impact. The statistics are compiled by the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) and are normally released at 8:30 a.m. on a Friday in the following month, at 9:30 p.m. during daylight saving time and 10:30 p.m. during standard time. The large share of personal consumption in U.S. GDP and the Federal Reserve’s dual mandate of price stability and maximum employment are described as factors affecting the expansion of personal consumption when employment improves and monetary policy.

In the July employment report released on 2 August 2024, which was also called “Reiwa’s Black Monday,” the unemployment rate rose from 4.1% to 4.3%. In response, U.S. long-term interest rates and stock prices plunged, while the exchange rate moved from around ¥149 per dollar to as high as ¥146.42, indicating yen strength and dollar weakness. The 10-year U.S. Treasury yield fell from 3.94% to 3.79%.

On the following trading day, 5 August, the Nikkei fell ¥4,451.28 from the previous day, recording one of its largest declines ever and surpassing the 1987 Black Monday decline. Some viewed the Bank of Japan’s rate hike as the cause of the Japanese market’s reaction, but the article points out that the impact of the U.S. employment report was greater.

Overall, the U.S. employment report continues to attract attention in global markets, and the article emphasizes the view that U.S. employment conditions and wage trends are directly linked to personal consumption as well as global long-term interest rates and stock prices.