Core Viewpoint - The Federal Reserve, represented by Jefferson, emphasizes that its decisions are based on data, outlook, and a balance of risks [1] Summary by Relevant Categories - **Decision-Making Process** - The Federal Reserve's approach to decision-making involves a careful analysis of data and future economic outlooks, alongside an assessment of associated risks [1]

Core Viewpoint - Spot gold prices have gradually recovered to the range of $3980-$3990 after a sell-off, but current price momentum appears insufficient to challenge the psychological level of $4000 [1] Group 1: Market Dynamics - The ten-year U.S. Treasury yield surged to 4.16%, reaching a one-month high, which could continue to support the dollar and exert pressure on the gold market [1] - The bond market is showing signs of an independent trend, influenced by slightly better-than-expected U.S. private sector economic data, which may impact the Federal Reserve's decision in December [1] Group 2: Interest Rate Expectations - Traders are currently pricing in a 61% probability of a 25 basis point rate cut in December, but this is not guaranteed [1] - Any adjustments to the market's pricing of rate cut expectations will have a significant impact on gold in the coming weeks [1] Group 3: Seasonal Trends - The upcoming period from December to January is traditionally a bullish season for precious metals [1]

Group 1 - The ongoing government shutdown in the U.S. has significant implications for both the economy and the livelihoods of federal employees, with many working without pay and others on forced leave [1][3][5] - Recent polls indicate that Congress's approval rating has dropped to 18%, highlighting public frustration over the political stalemate and its impact on ordinary citizens [5][10] - The delay in the release of key economic data, including the CPI, has created uncertainty in the markets, as analysts lack reliable indicators to assess economic conditions [8][19] Group 2 - The Senate's eighth vote failed to pass a funding bill, with a significant gap of 11 votes from the required threshold, reflecting deep partisan divisions over budget allocations [10][12] - The core disagreement between the two parties centers on funding for Medicaid, with Republicans advocating for spending cuts and Democrats insisting on maintaining support for low-income groups [12][15] - The ongoing political impasse has escalated tensions, particularly with former President Trump's announcement of a plan to permanently lay off federal employees, complicating negotiations further [17][19] Group 3 - The Federal Reserve faces challenges in making informed decisions due to the delayed CPI data, which is crucial for assessing inflation trends ahead of their upcoming meeting [19][24] - Historical context shows that previous shutdowns have had severe economic repercussions, and the current situation is more complex due to the intertwining issues of healthcare funding and economic data uncertainty [22][27] - The upcoming CPI data release on October 24 is seen as a potential turning point that could either facilitate negotiations or prolong the deadlock, with significant consequences for ordinary citizens [24][27]

Core Viewpoint - The current labor market in the U.S. shows no significant hiring or layoffs, with demand and supply contracting at a similar pace, indicating a stable yet cautious economic environment [1] Group 1: Labor Market Dynamics - U.S. companies are neither engaging in large-scale hiring nor layoffs, reflecting a balanced labor market [1] - Labor demand remains robust, particularly among high-income groups, suggesting a divergence in economic activity based on income levels [1] Group 2: Cost Management and Productivity - Companies are planning to pass on tariff costs to consumers, indicating a strategy to manage rising expenses [1] - There are signs of improving productivity, which may help alleviate some cost pressures faced by businesses [1] Group 3: Consumer Behavior - Consumers continue to spend, but with more caution compared to previous years, indicating a shift towards more selective purchasing decisions [1] Group 4: Federal Reserve Data Challenges - The Federal Reserve is facing challenges due to a reduction in available data, complicating its decision-making process [1]

Group 1 - The U.S. government shutdown has delayed the release of key economic reports, including the Consumer Price Index (CPI) and employment data, which are crucial for economic assessment [1] - The Labor Department's Bureau of Labor Statistics, responsible for these reports, is significantly impacted by the shutdown, leading to potential longer delays in data collection and processing for October [1] - Federal Reserve Chairman Jerome Powell indicated that the Fed is currently relying on private sector data to evaluate the economy, but emphasized that this cannot replace government statistics, particularly for October data [1] Group 2 - High inflation typically necessitates the Federal Reserve to maintain high interest rates, while a slowing job market would push for rate cuts [2] - In August, U.S. non-farm payrolls increased by only 22,000, a significant drop from the revised 79,000 in July and well below market expectations [2] - The Consumer Price Index rose by 2.9% year-over-year in August, marking the largest increase since January and remaining above the Fed's long-term target of 2% [2] - The Federal Open Market Committee is scheduled to meet on October 28-29, with market expectations leaning towards another 25 basis point rate cut due to the ongoing weakness in the job market [2]

Group 1 - The U.S. government shutdown on October 1, 2025, has disrupted the flow of critical economic data, impacting decision-making for policymakers and investors [1][3][4] - Key economic indicators such as the monthly employment report and unemployment data are now delayed, leading to uncertainty in assessing the health of the economy [3][6][10] - The Federal Reserve is facing significant challenges in formulating monetary policy due to the lack of timely and accurate economic data, which is essential for balancing inflation control and employment stability [6][8][10] Group 2 - The market is experiencing heightened volatility as investors react to the uncertainty caused by the government shutdown, with the Chicago Board Options Exchange Volatility Index showing a notable increase [10][11] - Companies that rely on government contracts, such as construction and technology firms, are facing reduced orders and delayed payments, leading to declining stock prices and diminished investor confidence [11][10] - Investors are advised to increase allocations to fixed-income assets and maintain cash reserves to navigate the turbulent market conditions effectively [13][14]

Market Performance - The three major US stock indices experienced fluctuations during the trading session on October 2, ultimately closing higher, with the Dow Jones Industrial Average up 0.17%, the Nasdaq up 0.39%, and the S&P 500 up 0.06%, all reaching record closing highs [2] - Major technology stocks showed mixed results, with Meta and Broadcom rising over 1%, while Tesla fell more than 5% [2] Chinese Stocks - The Nasdaq Golden Dragon China Index rose by 1.06%, with most popular Chinese stocks increasing, including Century Internet up over 4%, Alibaba, NIO, and Kingsoft up over 3%, and Baidu up over 2% [4] - Bilibili and Li Auto rose over 1%, while Miniso fell over 3% [4] Federal Reserve and Economic Outlook - Federal Reserve official Goolsbee indicated that the Fed will make decisions based on existing information in the absence of official unemployment data, emphasizing the need to avoid premature rate cuts [4] - Analysts suggest that investors appear to bet on a short-term government shutdown, which is unlikely to have a severe impact on the US economy [4] Government Shutdown Implications - President Trump warned that a prolonged government shutdown could lead to layoffs and project cuts, following the Senate's rejection of funding bills that resulted in the federal government shutting down for the first time in nearly seven years [5] - Vice President Pence and White House spokesperson Levitt indicated that layoffs are likely to occur soon if the shutdown continues [5] Commodity Prices - International gold prices fell, with COMEX gold futures down 0.43% at $3880.8 per ounce, and COMEX silver futures down 1.7% at $46.87 per ounce [6] - International oil prices also saw a significant drop, with WTI crude oil futures falling over 2%, influenced by a report showing an increase in OPEC's oil production by 400,000 barrels per day to 29.05 million barrels per day in September [6]

Core Viewpoint - The Federal Reserve, represented by Goolsbee, emphasizes the need to make decisions based on existing information in the absence of official unemployment rate data, highlighting the importance of caution in avoiding premature interest rate cuts [1] Group 1 - The Federal Reserve is currently lacking official unemployment rate data, which influences its decision-making process [1] - There is a strong emphasis on the need for caution to prevent overreacting with early interest rate reductions [1]

Core Insights - The government shutdown is hindering the Federal Reserve's ability to interpret economic conditions due to a lack of official data [1][2] - Concerns about rising inflation in the service sector were reiterated, suggesting persistent price pressures in less tariff-affected areas of the economy [1] Group 1 - The Chicago Fed President, Goolsbee, emphasized the difficulties posed by the absence of economic data during the government shutdown [2] - Goolsbee stated that the Federal Reserve is entering a critical period where understanding potential shifts in the economy is essential, but the lack of data complicates this task [2] - The government agencies responsible for collecting and publishing economic data will not operate during the shutdown, affecting the release of key reports such as the monthly consumer price report scheduled for October 15 [2]

Core Points - The U.S. federal government is set to shut down if Congress does not pass a new fiscal year budget by midnight on Tuesday, October 1, leading to a halt in data releases from the Bureau of Labor Statistics (BLS) [2] - The shutdown will impact key economic indicators, including the non-farm payroll report, initial jobless claims, and the Consumer Price Index (CPI), which are crucial for assessing the labor market and inflation ahead of the Federal Reserve's meeting [2][3] - Historical precedents indicate that government shutdowns can lead to significant market volatility and uncertainty, as seen during previous shutdowns when critical economic data was delayed [3][4] Impact on Financial Markets - The absence of key economic reports is expected to amplify volatility in interest rate futures, leading to speculative pricing in the asset markets [3] - The BLS is not the only affected department, but its data is vital for financial markets, and a prolonged shutdown could hinder the Federal Reserve's ability to make informed decisions regarding interest rates [3] - Wall Street strategists have raised the probability of a government shutdown to 70%, warning that if combined with debt ceiling disputes, October could see volatility comparable to the 2011 S&P downgrade [4]