Back in business?
Tomorrow will mark one week since the President’s signature was provided to end the longest US government shutdown in history. It is not uncommon for the legacy of a shutdown to drag on beyond its formal conclusion date because it can naturally take differing amounts of time for different departments to get back to capacity. The 2025 shutdown, let alone the looming prospect for a 2026 shutdown, will continue to create uncertainty within the US economy and markets in turn for some time.
One key element of this shutdown driven uncertainty are the gaps in US data. There are suggestions in the case of the October data that departments including the BLS (better known as the publisher of the monthly non-farm payroll data) may not publish a data point at all. This is because not only was this government department’s ability to publish data during the shutdown hindered, but its ability to collect and process the live data was also impeded. The fate of October and even some November data therefore remains uncertain when it is so heavily in demand for publication.
Beyond this, because this was the longest shutdown on record, it is not yet known just how much of an impact to public employment levels there has been. Most notably, the question of how many unpaid furloughed employees had to find new work in the private sector and the impact upon public employment remains unanswered. This holds implications for how quickly and even whether it will be possible in the near run for the government to resume normal operations soon. Despite this uncertainty, markets look ahead to the September NFP data due to be published on Thursday afternoon UK time. The evening prior, markets will receive the latest Fed minutes. Despite a correction to the USD sell-off that occurred in the middle of last week, the expectations for the December Fed meeting have continued to drift towards a more balanced probability of a cut versus a hold in benchmark rates.
Discussion and Analysis by Charles Porter
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