Good morning,
It is the 10th day of the government shutdown, and the bond market is beginning to feel it. With the flow of government data cut off, the information vacuum is widening just as the next Fed meeting (October 29) comes into view. For a data-dependent Fed, the cut-or-no-cut question becomes harder to answer when there’s less data to guide them.
Only three weeks ago, at the September meeting, both markets and the Fed appeared aligned in expecting rate cuts at the October and December meetings. But with a growing list of assets—gold, the dollar, bitcoin, and AI equities—all trending higher, it’s fair to ask how restrictive current policy really is, and whether further cuts would just add fuel to the fire.
We’re now in “no-man’s-land” for yields, with bond desks waiting for clarity on growth, inflation, and even the Fed’s own staffing dynamics.
Meanwhile, equities remain largely indifferent. The S&P 500 Index is up roughly +0.3% so far this week, with no obvious catalyst in sight for a long-overdue pullback.
Be well,
Mike