The Bureau of Labor Statistics is experiencing technical problems right before the August employment report is set to be released. Their website shows that all data retrieval tools are currently unavailable due to these issues.

Uncertainty About Report Release

There is no clear information yet on whether this will delay the release of the report. However, accessing all the necessary data might become difficult. The announcement did not include a timeline for when these technical problems will be fixed. Currently, the Bureau of Labor Statistics is dealing with technical issues just before the August employment report. This situation creates significant uncertainty around this important economic release. For us, this uncertainty could lead to potential market volatility. This scenario suggests that implied volatility might be underestimated across major indices. We should think about buying volatility using VIX calls or straddles on the SPX. This strategy can gain from a large price movement in either direction, which is likely to happen once the data is finally released and interpreted. The VIX has been around 14 for the past month, indicating some market complacency. With consensus forecasts for August Non-Farm Payrolls at +180,000, any major deviation or delay could easily drive the VIX back towards 20. The Fed’s reliance on data for their November meeting makes this report even more crucial.

Lessons From Past Events

Looking back to the government shutdown in October 2013, we can find a similar situation. Key economic data, including the jobs report, was delayed, resulting in choppy trading followed by a significant price movement once the backlog was cleared. This history suggests we might face a similar pattern of low activity followed by a sharp price discovery event. For those of us who are heavily invested, now is a good time to hedge. Buying short-dated protective puts on indices like the QQQ or on specific high-beta stocks can be an affordable way to protect against negative surprises. The cost of these options will quickly rise if uncertainty continues into next week. Another risk is the reliability of the data itself, even if it is released on time. Any suggestion of errors or future revisions due to these “technical difficulties” could shake market confidence. This could lead to erratic price movements and disconnect the market from its usual response to the headlines. Create your live VT Markets account and start trading now.

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