Core Viewpoint - The outcome of ongoing negotiations may lead to a repeat of the market volatility experienced in April, affecting both Treasuries and stocks [1] Group 1 - The potential for upheaval in financial markets is highlighted, indicating that both Treasuries and stocks are at risk of significant fluctuations [1]

Group 1 - The upcoming auction is expected to perform well, with a tendency for the market to push yields higher [1] - Current bond rates present buying opportunities, despite concerns about the government shutdown impacting GDP [2][3] - Historical data shows that past government shutdowns have not significantly affected market movements, indicating a temporary impact [3] Group 2 - Corporate bond spreads are historically tight, suggesting high prices and potential for losses in the coming year [4][5] - Investment in high-quality corporate bonds is recommended to maintain value, but overall losses are anticipated [6] - Mortgage-backed securities are highlighted as a better investment option due to low coupon rates and favorable prepayment conditions [7][8] Group 3 - The economy is perceived as strong due to AI and capital expenditure, but concerns about a slowdown are emerging [9][11] - Various economic indicators, including housing and wage growth, are showing signs of decline, prompting expectations for rate cuts by the Fed [11][12] - The stock market's strength is viewed as an illusion, with skepticism about the profitability of AI investments in the near future [13][14]

Core Insights - US Treasury yields increased as economic data faced delays due to the federal government shutdown, leaving investors without key labor market indicators to gauge the Federal Reserve's next moves [1][2] - The two-year note yield rose by three basis points to 3.56%, while the 10-year yield remained stable at 4.10% [1] Group 1: Economic Impact of Government Shutdown - The ongoing government shutdown could lead to expectations of lower interest rates if it negatively impacts the economy, as suggested by UBS strategist Elena Amoruso [3] - The ISM readings indicated a weakening US economy, reinforcing concerns about economic activity during the shutdown [3] Group 2: Market Reactions and Predictions - Traders are anticipating a widening spread between five-year and 30-year Treasuries, projected to reach 106.5 basis points, driven by expectations of rate cuts [4] - There is over a 90% probability that the Federal Reserve will implement a 25 basis-point rate cut this month, reflecting market sentiment [4] Group 3: Labor Market Data Sensitivity - With official labor market data delayed, private data sources like Revelio Labs have gained importance, showing a gain of over 60,000 in total nonfarm payrolls for September [5] - The Bureau of Labor Statistics indicated that its reports may be delayed due to the shutdown, prompting traders to rely more on alternative data sets [6]

Ernest HoffmanErnest Hoffman is a Crypto and Market Reporter for Kitco News. He has over 15 years of experience as a writer, editor, broadcaster and producer for media, educational and cultural organizations. Ernest began working in market news in 2007, establishing the broadcast division of CEP News in Montreal, Canada, where he developed the fastest web-based audio news service in the world and produced economic news videos in partnership with MSN and the TMX. He has a Bachelor's degree Specialization in ...

The dollar slipped Wednesday as the US entered its first government shutdown in nearly seven years and a report showing private-sector payroll growth turning negative kept a lid on the US currency. The Bloomberg Dollar Spot Index pared losses late in New York trading but closed down a fourth day, its longest such streak in a month. The yen rallied to a two-week high, while Treasuries rose across the curve alongside US equities. Most Read from Bloomberg Shutdowns have typically weighed on the greenback, ...

Core Viewpoint - Treasuries are expected to close out a third consecutive quarter of gains as a potential US government shutdown raises concerns about economic growth, making bonds more attractive [1][2]. Group 1: Treasury Market Performance - The bond market has shown a 1.5% return in the recent quarter, with Treasuries returning over 5% in the first three quarters of 2025, indicating the best performance since 2020 [1]. - The 10-year yield remained stable at 4.14%, while the two-year yield is at 3.60%, close to its lowest levels in the past year [3]. Group 2: Economic Implications of Government Shutdown - A potential government shutdown could disrupt operations, delay key economic data releases, and negatively impact economic growth, depending on its duration [2][5]. - The uncertainty surrounding the labor market, highlighted by recent reports of weakness in job openings, adds to the critical juncture of the economy regarding growth and inflation [5]. Group 3: Market Sentiment and Federal Reserve Actions - The market has rallied this year due to expectations of interest rate cuts by the Federal Reserve, which recently lowered rates to a range of 4% to 4.25% but remains cautious due to persistent inflation [4]. - Scott Buchta from Brean Capital noted a "small flight to quality trade," as more investors become optimistic about the market amid the potential for an extended government shutdown [3].

(Bloomberg) — The big question for bond investors in the days ahead is whether the monthly US jobs report will shake their already-wavering conviction in another Federal Reserve interest-rate cut as soon as October. Most Read from Bloomberg Traders pared bets on additional Fed easing last week as officials voiced diverging views on monetary policy while some economic data was stronger than expected. There’s one major complication for financial markets, however: A potential federal-government shutdown s ...

Investment Rating - The report maintains an equal-weight rating on equities, overweight in core fixed income, and underweight in other fixed income [4][5]. Core Insights - The Federal Reserve is expected to initiate rate cuts, with four consecutive 25 basis point cuts anticipated through January 2026, leading to a terminal rate of 2.875% [2][20]. - The macroeconomic environment is characterized by a focus on improving expectations despite ongoing trade tensions and global slowdown risks, with a preference for quality assets [3][4]. - The report highlights a constructive outlook on USD assets, while cautioning about potential pressures on the dollar due to rising policy uncertainty [4]. Economic Outlook - In the US, real GDP growth showed a recovery in Q2 2025, but domestic demand has slowed, averaging 1.9% quarter-on-quarter in the first half of the year [8]. - The Euro area experienced stable GDP growth in the first half of 2025, with PMIs indicating continued firmness [9]. - Japan's nominal growth remains positive, supported by resilient manufacturing sentiment, while China's GDP growth is expected to soften in the second half of the year due to reduced stimulus [9]. Sector Recommendations - In the US, the report favors quality cyclical stocks and those with high operational efficiency, while in Japan, it recommends companies benefiting from domestic reflation and defense spending [6]. - Key sectors in Europe include defense, banks, software, telecoms, and diversified financials, with a focus on resilient market pockets [6]. - Emerging markets are favored towards financials and domestic-focused businesses over exporters [6]. Earnings Forecasts - The S&P 500 is projected to have an EPS of 259 for 2025, increasing to 283 in 2026, reflecting a 7% and 9% year-on-year growth respectively [7]. - The MSCI Europe index is expected to see a slight decline in EPS for 2025, with a forecast of 138, but a modest increase to 141 in 2026 [7]. - Emerging markets are projected to have an EPS growth of 6% in 2025 and 10% in 2026, with a forecast of 84 and 92 respectively [7].

At BlackRock Inc., PGIM and other Wall Street firms, bond-fund managers are sticking to trades that will likely pay off even if the Federal Reserve’s path is again knocked off course by surprising turns in the economy. Most Read from Bloomberg The run-up to the Fed’s first interest rate cut in nine months has already supplied solid returns, driving the Treasury market to its biggest annual gains since the pandemic forced the central bank to drive its lending rate to the cusp of zero. But when Jerome P ...

CONCLUDED Stock Market News From Sept. 17, 2025: Dow Gains After Fed Decision Last Updated: 4 hours ago Treasury Market Is Fully Prepared for a Cut By Karishma Vanjani The Wall Street Journal The move in Treasuries suggest the market is ready for the Federal Reserve to start cutting interest rates again. The 2-year yield, which is most sensitive to changes in rates, has fallen 0.246 percentage points since the Fed Chair Jerome Powell gave a speech at the Jackson Hole Economic Symposium. Powell, on the morni ...