US futures are down as investors are grappling with some relative uncertainty surrounding the government shutdown. But as mentioned before, this whole thing is going to be more of an operational issue rather than an economic risk. This will threaten delays to key US economic data, especially the non-farm payrolls and potentially even the CPI report if the shutdown lasts long enough.
Still, that doesn’t mean the Fed will be flying totally blind going into the upcoming FOMC meeting at the end of the month. The central bank will still have access to other resources like private sector surveys and their own business surveys in getting a feel of things. It’s just that market expectations will now be more driven by Fedspeak rather than the data in the week(s) ahead.
As things stand, the bond market is not seeing much of a reaction whatsoever to the shutdown news. Meanwhile, the dollar is slightly lower at the balance but nothing overly concerning in terms of traders’ reaction.
As for Fed funds futures, that’s still showing ~95% odds of a 25 bps rate cut for the end of this month
