Core Viewpoint - The recent public statements from key Federal Reserve officials indicate a strong consensus towards a potential interest rate cut in December, shifting market expectations significantly [1][3][12]. Group 1: Federal Reserve Officials' Statements - San Francisco Fed President Mary Daly and New York Fed President John Williams have expressed support for a rate cut, emphasizing that risks in the labor market now outweigh inflation concerns [1][3]. - Williams highlighted that there is still room for policy adjustments, suggesting that a rate cut is the "safest choice" given the current economic conditions [3]. - Daly warned of the fragility of the labor market, stating that any increase in layoffs could lead to a significant rise in unemployment [5]. Group 2: Market Reactions - Following the dovish comments from Fed officials, the probability of a 25 basis point rate cut in December surged from approximately 40% to 80% within a week [1][12]. - The U.S. Treasury market reacted positively, with the benchmark 10-year Treasury yield dropping to 4.03%, marking a new low for the month [12]. Group 3: Decision-Making Challenges - The Federal Reserve faces unprecedented challenges due to the lack of key economic data, as the government shutdown has delayed the release of important employment and inflation reports [7][16]. - This data vacuum complicates the decision-making process for the Fed, as officials will have to make judgments without complete information [7][16]. Group 4: Internal Divisions - Despite the growing dovish sentiment, there are still significant divisions within the Federal Reserve, with some members advocating for a more cautious approach [9][10]. - Boston Fed President Susan Collins has expressed that a "moderate or slightly tight" policy stance remains appropriate due to resilient demand potentially exerting upward pressure on inflation [10].