CPI Offers Lone Fixed Income Catalyst as Government Shutdown Continues

Core Viewpoint - The fixed income market is experiencing credit concerns, leading to a decline in yields, particularly in the 10-year Treasury, which is currently below 4%, marking the lowest level in some time [1][2]. Fixed Income Market Analysis - The 10-year Treasury is expected to trade in a rangebound manner, with the current level potentially being the lower end of that range, influenced by psychological factors at the 4% mark [3]. - There is a lack of catalysts in the fixed income market, primarily due to the government shutdown, which has limited the flow of data [5][6]. - The upcoming Consumer Price Index (CPI) report on the 24th is anticipated to be a significant event, as it is one of the few data points available, although its completeness is in question [6][7]. Federal Reserve Commentary - The Federal Reserve appears divided, with differing views among officials regarding interest rate cuts, with expectations leaning towards a cut this month to mitigate potential labor market deterioration [8][9][12]. - Recent commentary from Fed officials suggests a focus on the labor market, with indications of a softening trend based on the ADP report [10][11].