(Bloomberg) — There are plenty of events unfolding on Wall Street right now that could move the market.

Most read from Bloomberg

But as traders and analysts prepare for Federal Reserve Chairman Jerome Powell’s speech in Jackson Hole and then Nvidia’s earnings and economic growth numbers next week, many remain hung up on the government’s botched jobs report on Wednesday and the way it wreaked havoc on stock and bond markets.

And they didn’t beat around the bush. “It’s just terrible,” said Glen Capelo, a managing director at Mischler Financial Group. “There’s a big problem,” said Claudia Sahm, chief economist at New Century Advisors. “It’s insane,” said Andrew Brenner, head of global fixed income at NatAlliance Securities.

The problems began when the Bureau of Labor Statistics failed to release a key revision to its employment figures by 10 a.m. New York time as expected.

That error was compounded when BLS officials subsequently began providing the data to analysts who called the agency, revealing that job growth estimates would be significantly reduced.

So for a few grueling minutes, a handful of companies, including BNP Paribas and Mizuho Financial Group, had the data while everyone else was left in the dark as markets lurched up and down. Rumors flew, with some repeating the correct number and others spreading false numbers. The BLS finally released the data on its website just after 10:30 a.m., when it showed that the number of jobs created in the year through March would likely be revised down by 818,000, the most since 2009.

Brenner got really caught up in it. He had heard an economist on CNBC say that the revised number was down 676,000 and he had quickly passed that on to his clients. “Then everyone corrected me about 10 minutes later,” he said. The government “is using outdated systems and I don’t think they have any idea how important some of these numbers are.”

The staccato swings in stocks and bonds made it difficult for anyone who had gotten the number to profit, but that was little consolation to Brenner. For him, the price action in some parts of the Treasury market — such as five- and seven-year notes — made it clear to him that some were trading on the data. “There’s no doubt about that,” he said.

The botched publication is the latest in a series of embarrassing missteps involving the Labor Department’s reporting, which has long been a key guide for investors seeking to gauge the health of the economy and the direction of interest rates.

The story continues

In May, the BLS inadvertently released consumer price data 30 minutes early. A month earlier, records showed that an economist at the agency had fielded numerous questions from major Wall Street firms including JPMorgan and BlackRock about details of data related to the inflation gauge, raising questions about selective disclosure. And in late 2022, stock futures rose just ahead of an inflation release, fueling speculation that the figure had been leaked.

Hair-trigger financial markets have, of course, been rattled by all sorts of things over the years. Hoax press releases and premature corporate disclosures have often caused market moves. But U.S. government data plays an outsized role in shaping perceptions of the economy, making any breach or omission a major cause for consternation.

A spokesman told Bloomberg on Wednesday that the agency’s inspector general has been asked to investigate what happened. “The integrity of our data releases is BLS’s highest priority, and we are carefully reviewing our procedures to ensure this does not happen in the future,” he said. Representatives for BNP Paribas and Mizuho did not respond to telephone messages seeking comment outside normal business hours.

The disgruntled on Wall Street, to be clear, are not directing their anger at the companies that managed to get the data. They all wanted it, too. Their frustration is almost exclusively directed at the government.

Few on Wall Street have been as caustic in their assessment of the government’s data handlers as Capelo. “The fact that this was a number that had been talked about, they knew it was important, and then they screwed it up like this,” said Capelo, who came to Mischler after stints at firms including Salomon Brothers and RBS Greenwich Capital.

A big part of what irritates Capelo is the fact that these data release issues keep happening over and over again, causing a lot of people in the market to get into trouble. ‘Is it completely unfair? Absolutely. Should it be changed? Absolutely. We’re not living in the Stone Age. It should be pretty easy to fix.’

The data involved do not generally arouse much interest outside economic circles.

This time, however, it attracted much more attention. Both stocks and bonds have been on the rise in recent weeks as speculation mounted that the labor market is cooling enough for the Fed to finally cut interest rates. The numbers ultimately helped confirm that view, showing that the government had actually overestimated the number of jobs created.

The trading that followed was erratic. It was hard to tell whether the number was ultimately positive or negative for the stock market. For bonds, it was more clearly bullish. But even there, the moves were inconsistent. What is clear is that trading volumes peaked around that half-hour lag.

Vineer Bhansali, the founder of asset management firm LongTail Alpha, sat back and watched the chaos unfold. He said he wasn’t actively trading in the Treasuries market at the time. But he still realized how badly it could have gone for him or anyone else who had taken a position and been left in the dark.

“If you are sidelined because you don’t have the right data, you can get into serious trouble,” Bhansali said.

And then he echoed what many others had said: the government needed to take action to fix these outages, and quickly. “This is definitely something that people should be looking at.”

–With assistance from Boris Korby and Edward Bolingbroke.

Most read from Bloomberg Businessweek

©2024 Bloomberg LP