Bond Traders Eye Make-or-Break Data to Chart Fed’s Next Move

Economic Data and Federal Reserve Actions - The end of the government shutdown will lead to the release of key economic reports, including the September employment report, which is expected to solidify expectations for future interest rate cuts by the Federal Reserve [1] - The lack of government data during the shutdown has made it challenging to assess the economic direction, although private data sources indicate a weakening job market, prompting the Fed to lower its benchmark rate in recent meetings [2] - There is a possibility that upcoming government figures may show stronger-than-expected job growth, which could influence the Fed's decision on interest rates at the December meeting [3] Market Reactions and Predictions - As economic data begins to emerge, there is potential for the labor market to show more stability, which may reduce the likelihood of a rate cut in December and increase market volatility [4] - Treasuries have performed well this year, with a return of approximately 6%, driven by a slowdown in employment and uncertainty from trade tensions [5] - Fed Chair Jerome Powell has indicated that recent rate cuts were protective measures rather than attempts to stimulate the economy [6] Future Rate Cut Expectations - Futures traders have reduced the odds of a quarter-point rate cut in December to below 50%, reflecting uncertainty among Fed officials regarding such a move [7]