Hua Er Jie Jian Wen·2025-11-02 04:28Core Viewpoint - The ongoing U.S. government shutdown is creating a "data fog" for the Federal Reserve, making its December interest rate decision uncertain [1] Group 1: Federal Reserve's Position - Fed Chairman Powell's recent statements have shifted from a dovish to a more hawkish tone, indicating that a rate cut in December is "far from certain" [1][2] - Powell emphasized that the Fed's monetary policy is "not on a preset path" and will increasingly rely on data, highlighting the challenges posed by the current lack of economic data [2] - The Fed announced it will halt quantitative tightening (QT) starting December 1, which some market participants view as a dovish countermeasure [2] Group 2: Impact of Government Shutdown - The duration of the government shutdown directly affects the data available for the Fed's decision-making [3] - Morgan Stanley's analysis suggests that the longer the shutdown lasts, the lower the probability of a rate cut [5] - Historical data from the 2013 government shutdown indicates that the timing of data releases is critical for the Fed's decision-making process [4] Group 3: Market Perspectives - Morgan Stanley believes that if the shutdown continues, the Fed will have limited data to support a rate cut, while Citi expresses optimism that the shutdown may end within two weeks, allowing for timely data releases [7][8] - Citi forecasts that if the government reopens soon, the Fed could receive multiple employment reports before the December meeting, supporting a potential rate cut [7] - Different scenarios regarding the end of the shutdown illustrate varying levels of data availability, impacting the Fed's ability to make informed decisions [8]